If MPC = 0

question 4

Multiple Choice

If MPC = 0.75, a $40 billion decrease in government purchases would have what size effect on the "first round" of changed consumption, and what effect on AD?

• A)​reduce "first round" consumption by $160 billion; reduce AD by $640 billion
• B)​reduce consumption by $120 billion; reduce AD by $480 billion
• C)​reduce consumption by $40 billion; reduce AD by $160 billion
• D)​reduce consumption by $30 billion; reduce AD by $160 billion

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Definitions:

Physical Products

Tangible items that can be bought, sold, and used by consumers, differing from services or digital products.

Media Economy

A subset of the economy concerned with the production, distribution, and consumption of media goods and services.

News Outlets

Organizations that gather, report, and distribute news to the public via various mediums like newspapers, television, and the internet.

Advertisers

Companies or individuals who pay to promote their products, services, or ideas through various media channels.