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-Suppose the MPC in the Economy in Figure 10

question 64

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   -Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD<sub>0</sub> to AD<sub>1</sub> was caused by a decrease in investment of $20 billion.What will the magnitude of the second decrease in aggregate demand be (for example,AD<sub>1</sub> to AD<sub>2</sub>) ? A) $15 billion. B) $20 billion. C) $80 billion. D) $130 billion.
-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) ?

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Definitions:

Hernán Cortés

A Spanish Conquistador who led an expedition that caused the fall of the Aztec Empire and brought large portions of what is now mainland Mexico under the rule of the King of Castile in the early 16th century.

Adam Smith

An 18th-century Scottish economist and philosopher, best known as the author of "The Wealth of Nations" and as the father of modern economics.

Amerigo Vespucci

An Italian merchant, explorer, and navigator from the Republic of Florence, who is best known for his namesake of the continents of North and South America.

Zheng He

A Chinese mariner, explorer, diplomat, and fleet admiral who commanded expeditionary voyages to Southeast Asia, the Middle East, and East Africa from 1405 to 1433.

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