Suppose the MPC Is

question 6

Multiple Choice

Suppose the MPC is .60.Assume there are no crowding out or investment accelerator effects.If the government increases expenditures by $200 billion how far does aggregate demand shift? If the government decreases taxes by $200 billion how does aggregate demand shift?

• A)$300 billion and $180 billion
• B)$300 billion and $300 billion
• C)$500 billion and $300 billion
• D)$500 billion and $500 billion

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Definitions:

0.51%

A percentage, typically representing an interest rate, dividend yield, or other financial ratio indicating a small change or amount.

Sum of Money

An amount of money expressed as a total figure, without specifying denominations or breakdown.

Increased

A term that signifies a rise in quantity or quality, often used in financial and statistical contexts.

Reduced

A term often used to describe a decrease or diminution in size, quantity, or intensity.