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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