Assume the MPC Is 0

question 8

Multiple Choice

Assume the MPC is 0.625.Assume there is a multiplier effect and that the total crowding-out effect is $12 billion.An increase in government purchases of $30 billion will shift aggregate demand to the

• A)left by $60 billion.
• B)left by $36 billion.
• C)right by $68 billion.
• D)right by $36 billion.

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Definitions:

Problem-Solution Method

A strategy that identifies a problem and then proposes a solution, often used in sales, marketing, and product development.

Buyer

Describes an individual or entity that purchases goods or services.

Negotiator

A person skilled in discussing and arranging terms and agreements between parties with differing objectives.

Preparation

The act of making ready or being made ready for use or consideration.