Suppose Households Save $40 Billion Less at Each Level of Income

question 71

Multiple Choice

Suppose households save $40 billion less at each level of income, and the MPC = 0.8.How will the aggregate expenditure line will be affected?  

• A) It will shift upward by $40 billion. 
• B) It will shift downward by $40 billion. 
• C) It will shift upward by $200 billion because of the multiplier. 
• D) It will shift downward by $200 billion because of the multiplier.

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Definitions:

ANOVA Table

a table that summarizes the analysis of variance test results, used to determine if there are any statistically significant differences between the means of three or more independent groups.

F-ratio

A statistic used to compare the variance among group means in an analysis of variance (ANOVA) test.

P-value

A function of the observed sample results in a statistical hypothesis test, representing the probability of obtaining test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is correct.

Speeds

Rates at which an object covers distance, often measured in units like miles per hour or kilometers per hour.