-Suppose the MPC in the Economy in Figure 10

question 45

Multiple Choice

-Suppose the MPC in the economy in Figure 10.2 equals 0.8 and the shift from AD₀ to AD₁ was caused by a decrease in investment of $30 billion.What will the total decrease in aggregate demand be (i.e. ,AD₀ to AD₂) as a result of the initial $30 billion decrease?

• A)$37.5 billion.
• B)$130 billion.
• C)$150 billion.
• D)$240 billion.

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Definitions:

Objective Methods

Techniques or procedures that are based on factual and measurable data, used to obtain unbiased results.

Psychoanalytic Theory

A theory of personality development and therapeutic framework that emphasizes unconscious motives and conflicts, developed by Sigmund Freud.

Humanist Theory

A psychological perspective that emphasizes the study of the whole person and the uniqueness of each individual, often associated with concepts of free will and self-actualization.

Genetic Theory

A theory that explains traits, behaviors, and conditions primarily through the influence of genetic information and heredity.