If Net Exports Fall $40 Billion, the MPC Is 9/11

question 206

Multiple Choice

If net exports fall $40 billion, the MPC is 9/11, and there is a multiplier effect but no crowding out and no investment accelerator, then

• A)aggregate demand falls by 2 × $40 billion.
• B)aggregate demand falls by 11/2 × $40 billion.
• C)aggregate demand falls by 11/9 × $40 billion.
• D)aggregate demand falls by 9/11 × $40 billion.

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Definitions:

Complementary Goods

Products or services that are used together, where the demand for one is increased when the price of the other decreases.

Demand Curve

An illustration that displays how the price of a product or service correlates with the amount people want to buy during a specific time frame.

Price

The amount in currency estimated, obligatory, or contributed as payment for something.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price within a specified time frame.