Suppose the MPC = 0

question 72

Multiple Choice

Suppose the MPC = 0.60 and government purchases increase by $40 billion.In Keynesian theory,which of the following is true?

• A) The TE curve shifts downward by $40 billion and total spending decreases by $40 billion.
• B) The TE curve shifts upward by $40 billion,and total spending increases by $40 billion.
• C) The TE curve shifts downward by $40 billion,and total spending decreases by $100 billion.
• D) The TE curve shifts upward by $40 billion,and total spending increases by $100 billion.

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Definitions:

NADH

Nicotinamide adenine dinucleotide (reduced form), a coenzyme found in all living cells that plays a critical role in energy production through oxidation-reduction reactions.

Fermentation

Anaerobic breakdown of glucose that results in a gain of two ATP and end products such as alcohol and lactate; occurs in the cytoplasm of cells.

Muscles

Tissues in the body that can contract, enabling movement and force generation.

Oxygen

A chemical element (O) essential for most life forms on Earth; it participates in respiration and forms part of water molecules.