Assume the MPC Is 0

question 221

Multiple Choice

Assume the MPC is 0.75. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the

• A)left by $200 billion.
• B)left by $400 billion.
• C)right by $800 billion.
• D)None of the above is correct.

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Definitions:

Energy

The capacity to do work, coming in various forms like kinetic, potential, thermal, electrical, chemical, and nuclear, and can be transformed from one form to another.

Depression

A mental health disorder characterized by persistently depressed mood or loss of interest in activities, affecting daily functioning.

Depressant

A substance that reduces functional or nervous activity, often used to reference drugs that lower neurotransmission levels, calming the body and mind.

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant, often abused for its euphoric effects.