If the Marginal Propensity to Consume Is 0

question 23

Multiple Choice

If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $115 billion increase in government expenditures would shift the aggregate demand curve right by

• A)$460 billion, but the effect would be larger if there were an investment accelerator.
• B)$460 billion, but the effect would be smaller if there were an investment accelerator.
• C)$345 billion, but the effect would be larger if there were an investment accelerator.
• D)$345 billion, but the effect would be smaller if there were an investment accelerator.

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Definitions:

Scoria Cones

Volcanic cones built from fragments of lava ejected during explosive eruptions, characterized by their rough, vesicular texture.

Volcanic Bombs

Large blobs of magma that are ejected from a volcano, solidify in the air, and fall to the ground in the vicinity of the volcano.

Toxic Gases

Harmful gases that can cause damage to living organisms, materials, and the environment, often produced by industrial activities or natural processes.

Vesicular Basalt

A type of basalt rock characterized by a porous texture due to gas bubbles trapped during volcanic eruption cooling.