If the MPC Is 0

question 116

Multiple Choice

If the MPC is 0.50 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $205 billion will eventually shift the aggregate demand curve to the right by

• A)$216 billion.
• B)$150 billion.
• C)$410 billion.
• D)$480 billion.

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Definitions:

Net Exports

The value of a country's total exports minus its total imports.

Exports

Goods or services sent from one country to another for sale or trade.

Quota

A trade limitation enforced by the government, restricting the quantity or financial value of products that can be exported or imported over a set timeframe.

Open-Economy Model

An economic model that considers the impact of trade and financial flows with other countries on the domestic economy.