Assume the MPC Is 0

question 100

Multiple Choice

Assume the MPC is 0.65.Assuming only the multiplier effect matters,a decrease in government purchases of $20 billion will shift the aggregate demand curve to the

• A)left by about $30.77 billion.
• B)left by about $57.1 billion.
• C)right by about $57.1 billion.
• D)right by about $30.77 billion.

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.

Indirect Cost

A cost that cannot be easily and conveniently traced to a specified cost object.

Cost Of Goods Sold

The total cost directly associated with producing the goods sold by a company, including materials and labor.

Manufactured

Refers to the state of having been made from raw materials through a process of production in a factory.