Assume the MPC Is 0

question 325

Multiple Choice

Assume the MPC is 0.625. Assuming only the multiplier effect matters, a decrease in government purchases of $10 billion will shift the aggregate demand curve to the

• A)left by about $13.3 billion.
• B)left by about $26.7 billion.
• C)right by about $36.7 billion.
• D)None of the above is correct.

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Definitions:

Asymptotic

The quality of the normal curve such that the tails never touch the horizontal axis.

Z Scores

An indicator that quantifies the distance of a particular value from the mean of a dataset, using standard deviations as the unit of measure.

Z Score

A statistical measurement that describes a value's relationship to the mean of a group of values, measured in terms of standard deviations.