Refer to Figure 9.3 for the Following Questions

question 55

Multiple Choice

Refer to Figure 9.3 for the following questions.
Figure 9.3

-Suppose that in Figure 9.3, government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP₁ to GDP₂, and this amount is $400 billion. If the MPC is 0.75, then what is the distance between N and L or by how much did government spending change?

• A)$100 billion
• B)$200 billion
• C)$10 billion
• D)$300 billion

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Definitions:

George H.W. Bush

The 41st President of the United States, serving from 1989 to 1993, known for his foreign policy achievements and domestic economic challenges.

Federal Agencies

Government bodies established by Congress to implement and administer specific legislation and regulation at the national level.

Devolution

The transfer or delegation of power to a lower level, especially by central government to local or regional administration.

Federal Government

The national government of a federated state, which shares power with sub-national entities.