Suppose the MPC Is 0

question 297

Multiple Choice

Suppose the MPC is 0.75.There are no crowding out or investment accelerator effects.If the government increases its expenditures by $200 billion,then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion,then by how far does aggregate demand shift to the right?

• A) $800 billion and $800 billion
• B) $800 billion and $600 billion
• C) $600 billion and $600 billion
• D) $600 billion and $450 billion