Assume That the MPC Is 0

question 5

Multiple Choice

Assume that the MPC is 0.8. Assuming that only the multiplier effect matters, how will a decrease in government purchases of $150 billion shift the aggregate demand curve?

• A) It will shift the aggregate demand curve left by $120 billion.
• B) It will shift the aggregate demand curve left by $150 billion.
• C) It will shift the aggregate demand curve right by $150 billion.
• D) It will shift the aggregate demand curve left by $750 billion.

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Definitions:

Hand Gestures

Movements of the hands and arms used to convey messages non-verbally, integral to communication and expression.

Eyes

Organs of vision that detect light and convert it into electro-chemical impulses in neurons for visual perception.

Lips

The fleshy, movable boundaries of the mouth, important for speaking, eating, and expressing emotions.

Concealed Information Test

a psychological assessment technique used to determine if someone is hiding key information, based on physiological responses to specific questions or stimuli.