Government expenditures on national defense


Suppose the economy's multiplier is 2. Other things equal, a $25 billion decrease in government expenditures on national defense will cause equilibrium GDP to:

A) decrease by $50 billion.

B) decrease by $150 billion.

C) remain unchanged since spending on military goods is unproductive and usually wasteful.

D) decrease by $25 billion.

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Accounting Basics: Government expenditures on national defense
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