Assume That the MPC Is 0

question 36

Multiple Choice

Assume that the MPC is 0.75 and that the price level is "sticky". If the Federal Reserve increases the money supply and investment spending increases by $8 billion, then aggregate demand is likely to:

• A) Increase by $6 billion
• B) Increase by $8 billion
• C) Increase by $32 billion
• D) Decrease by $8 billion

---

Definitions:

Axons

The long, slender projections of a neuron that transmit electrical impulses away from the neuron's cell body to other neurons, muscles, or glands.

Interneurons

Neurons located in the central nervous system that process and relay information between sensory neurons and motor neurons.

Endorphins

Substances produced by the body that bind to brain receptors to diminish the sensation of pain and induce a state of intense happiness.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing information and controlling most functions of the body and mind.