Assume the MPC Is 0

question 112

Multiple Choice

Assume the MPC is 0.75. Assume there is a multiplier effect and that the total crowding-out effect is $6 billion. An increase in government purchases of $10 billion will shift aggregate demand to the

• A)left by $24 billion.
• B)left by $36 billion.
• C)right by $34 billion.
• D)right by $36 billion.

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Definitions:

Distribution System

The network used to distribute goods or power from a source to end users.

Decision

The process of choosing among different options or actions based on certain criteria or considerations to achieve a desired outcome.

Producing Component

A part or element in a manufacturing process that is being made into a final product.