Assume That the MPC Is 0

question 191

Multiple Choice

Assume that the MPC is 0.8. Assume that there is a multiplier effect and that the total crowding-out effect is $7 billion. How will an increase in government purchases of $8 billion shift aggregate demand?

• A)It will shift aggregate demand left by $1 billion.
• B)It will shift aggregate demand left by $33 billion.
• C)It will shift aggregate demand right by $1 billion.
• D)It will shift aggregate demand right by $33 billion.

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Definitions:

Phagocytic White Blood Cells

White blood cells that protect the body by ingesting harmful foreign particles, bacteria, and dead or dying cells.

White Blood Cell

Leukocyte; a blood cell with a role in housekeeping and defense. Lymphocytes are a special category of white blood cells that carry out adaptive immune responses.

Antigen-Presenting Cell

Immune cells that process and present antigens to T-cells, initiating an immune response by showing them what to attack.

Dendritic Cell

A type of immune cell that presents antigens to T cells, initiating an adaptive immune response; pivotal in mediating immunity and tolerance.