To Eliminate an AD Shortfall of $100 Billion When the Economy

question 12

Multiple Choice

To eliminate an AD shortfall of $100 billion when the economy has an MPC of 0.80,the government should increase transfer payments by

• A)$25 billion.
• B)$100 billion.
• C)$80 billion.
• D)$20 billion.

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Definitions:

Coastal Accumulations

The build-up of sedimentary materials, such as sand and gravel, along coastlines due to oceanic and tidal movements.

Shallow

relating to an area of water that is not deep.

Narrow Islands

Long, slim landforms surrounded by water, often formed by volcanic activity or the buildup of sediment.

Clasts

Fragments or grains of mineral or rock detached from its original position and included within another rock.