Suppose the MPC Is 0

question 55

Multiple Choice

Suppose the MPC is 0.60.Assume there are no crowding out or investment accelerator effects.If the government increases expenditures by $200 billion,then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion,then by how much does aggregate demand shift to the right?

• A)$300 billion and $180 billion
• B)$300 billion and $300 billion
• C)$500 billion and $300 billion
• D)$500 billion and $500 billion

---

Definitions:

Total Revenue

The overall amount of money generated by a business or organization from its activities, without deducting any expenses.

Competitive Industry

An industry characterized by a large number of firms competing with each other, leading to efficient outcomes and low prices.

Cost Information

Data regarding the expenses incurred in the production, distribution, and sale of a product or the delivery of a service.

Demand Curve

A graphical representation showing the relationship between the price of a good and the amount of it that consumers are willing to purchase at different prices.