Assume That the MPC Is 0

question 128

Multiple Choice

Assume that the MPC is 0.75. Assuming only the multiplier effect matters, how will an increase in government purchases of $400 billion shift the aggregate demand curve?

• A)It will shift the aggregate demand curve left by $150 billion.
• B)It will shift the aggregate demand curve left by $250 billion.
• C)It will shift the aggregate demand curve right by $750 billion.
• D)It will shift the aggregate demand curve right by $1600 billion.

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