If the Marginal Propensity to Consume Is 5/6, and There

question 204

Multiple Choice

If the marginal propensity to consume is 5/6, and there is no investment accelerator or crowding out, a $20 billion increase in government expenditures would shift the aggregate demand curve right by

• A)$60 billion, but the effect would be larger if there were an investment accelerator.
• B)$60 billion, but the effect would be smaller if there were an investment accelerator.
• C)$120 billion, but the effect would be larger if there were an investment accelerator.
• D)$120 billion, but the effect would be smaller if there were an investment accelerator.

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