Suppose the MPC in the Economy in Figure 10

question 115

Multiple Choice

Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD₀ to AD₁ was caused by a decrease in investment of $20 billion.What will the magnitude of the second decrease in aggregate demand be (for example,AD₁ to AD₂) ?

• A)$15 billion.
• B)$20 billion.
• C)$80 billion.
• D)$120 billion.

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Definitions:

Antecedent

An antecedent is a thing or event that existed before or logically precedes another, often used in grammar to refer to the noun to which a pronoun refers.

Pronoun

A word that takes the place of a noun, such as he, she, it, they, which can refer to people, places, or things.

Incorrect Tense

The use of a verb form that is not appropriate for the time frame or sequence of events discussed, leading to grammatical errors.

Suffering

The state of undergoing pain, distress, or hardship, which can be physical, emotional, or psychological.