If the Marginal Propensity to Consume Is 2/3,and There Is

question 8

Multiple Choice

If the marginal propensity to consume is 2/3,and there is no investment accelerator or crowding out,a $20 billion increase in government expenditures would shift the aggregate demand curve right by

• A)$30 billion, but the effect would be larger if there were an investment accelerator.
• B)$30 billion, but the effect would be smaller if there were an investment accelerator.
• C)$60 billion, but the effect would be larger if there were an investment accelerator.
• D)$60 billion, but the effect would be smaller if there were an investment accelerator.

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Definitions:

Product

The result of multiplying two or more quantities together.

Gigabytes

A unit of digital information storage equal to 1,024 megabytes or roughly one billion bytes.

Megabytes

A unit of data measurement equal to 1024 kilobytes or 1,048,576 bytes, often used to quantify digital information.

Dimensional-analysis

A method used in science and engineering to convert between different units of measurement by using their dimensions.