Suppose That the MPC Is 0

question 7

Multiple Choice

Suppose that the MPC is 0.5 and there is no investment accelerator or crowding-out effects. If government expenditures increase by $200 billion, what happens to aggregate demand?

• A) It shifts right by $200 billion.
• B) It shifts left by $200 billion.
• C) It shifts right by $400 billion.
• D) It shifts left by $400 billion.

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Definitions:

Formulas Display

A feature in applications that shows mathematical equations or formulas typically in a spreadsheet program.

Exploding

In programming or data management, referring to the process of breaking down data or a dataset into smaller, more manageable pieces for analysis or processing.

Worksheet Columns

Vertical divisions in a spreadsheet that are identified by letters at the top, used to organize data.

Magnify

To increase the apparent size of an object, typically using a lens or software tool.