If Households Save $40 Billion Less at Each Level of Income

question 148

Multiple Choice

If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

• A)intersect the 45-degree line at a real GDP of $40 billion
• B)shift upward by $40 billion
• C)shift downward by $40 billion
• D)shift upward by $200 billion because of the multiplier mechanism
• E)shift downward by $200 billion because of the multiplier mechanism

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