Assume That the MPC Is 0

question 173

Multiple Choice

Assume that the MPC is 0.75 and that the price level is "sticky." If the Federal Reserve increases the money supply and investment spending increases by $8 billion, then aggregate demand is likely to

• A) increase by $6 billion.
• B) increase by $8 billion.
• C) increase by $32 billion.
• D) decrease by $8 billion.

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Definitions:

Supermajority Voting

The board needs more than a simple majority of directors to vote in favor of an action before the action is possible; for example, it may require a 2/3 or unanimous vote prior to action.

Managerial Discretion

The degree of freedom managers have in making decisions without needing direct approval from higher-ups.

Fraudulent Conduct

Deceptive actions or behavior intended to gain an unfair advantage or to deceive others, often leading to financial or personal loss for the victim.

Voting Power

The total number of votes shareholdings represent, allowing shareholders influence over corporate decisions.