From any additional national income, 20% is spent on imports, 25% is paid in taxes, 5% is saved and the rest is spent on domestically produced goods. According to the multiplier effect, if exports increase by $100 million, what will be the final increase in spending by the country's residents on domestically produced goods? A $50 million B $100 million C $200 million D $500 million
Mark scheme
Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.
- [1] B
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