Assume the Marginal Propensity to Consume (MPC) Is 0

question 96

Multiple Choice

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

• A) right by $80 billion.
• B) left by $200 billion.
• C) right by $400 billion.
• D) left by $400 billion.
• E) None of the above.

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Definitions:

Predictor Of Happiness

A factor that is indicative or capable of forecasting the presence and level of an individual's happiness.

Affect Balance

The frequency of positive emotions minus the frequency of negative emotions

James-Lange Theory

A theory of emotion suggesting that physiological arousal precedes the emotional experience, implying that different emotions are associated with specific bodily responses.

Physiological Arousal

The activation of the body's autonomic nervous system, resulting in physical responses such as increased heart rate, sweating, or rapid breathing.