Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:
A. $600 billion.
B. $650 billion.
C. $680 billion.
D. $730 billion.
Answer: B
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