Question 2 (4 points)
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Suppose that rich people have a marginal propensity to consume of 0.5 and poor people have a marginal propensity to consume of 0.9.
It has been (not seriously!) suggested that if you took all of the money that Elon Musk has, you would have enough to give every single person in the U.S. a million dollars.
If this happened, which of the following would you expect to happen? Choose the best answer.
Consumption would increase, but GDP would not change.
Nothing; this is just redistribution of existing income.
Consumption would increase greatly.
Consumption would not change, but GDP would increase.