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.