Assume the Marginal Propensity to Consume (MPC) Is 0

question 100

Multiple Choice

Assume the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:

• A) left by $80 billion.
• B) right by $200 billion.
• C) right by $400 billion.
• D) left by $400 billion.

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Definitions:

Human Resources

The abilities, skills, and health of human beings that contribute to the production of both current and future output. Investment in training and education can increase the supply of human resources.

Physical Resources

Tangible assets used in the production or delivery of goods and services, such as machinery, buildings, and raw materials.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.