Question

If the marginal propensity to save is 0.3 and the marginal propensity to import is 0.1, and the government increases expenditures by Rs. 10 billion, ignoring foreign-income repercussions, by how much will GDP rise?

A Rs. 15 billion
B Rs. 10 billion
C Rs. 20 billion
D Rs. 25 billion
E None of these
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