Suppose That the MPC Is 0

question 69

Multiple Choice

Suppose that the MPC is 0.5 and there is no investment accelerator or crowding-out effects.If government expenditures increase by $20 billion,what happens to aggregate demand?

• A)It shifts right by $20 billion.
• B)It shifts left by $20 billion.
• C)It shifts right by $40 billion.
• D)It shifts left by $40 billion.

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Definitions:

Perichondrium

A dense layer of connective tissue that envelopes cartilage, providing nutrients and aiding in growth.

Chondrocyte

Mature cartilage cell.

Connective Tissue

Tissue type that supports, binds together, and protects organs, including blood, bone, and adipose tissues.

Appositional Growth

To place one layer of bone, cartilage, or other connective tissue against an existing layer.