Assume the MPC Is 0

question 221

Multiple Choice

Assume the MPC is 0.75. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the

• A)left by $200 billion.
• B)left by $400 billion.
• C)right by $800 billion.
• D)None of the above is correct.

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Definitions:

Affiliated Group

A collection of related companies that function as a single economic entity through shared ownership and control.

Subsidiary Inclusion

The process of integrating a subsidiary company's financials into the parent company's financial statements.