Assume the MPC Is 0

question 103

Multiple Choice

Assume the MPC is 0.8.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 $180 billion.
• B)left by $500 billion.
• C)right by $180 billion.
• D)right by $400 billion.

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Definitions:

Rate Of Return

The increase or decrease in value of an investment over a certain period, shown as a percent of the investment's original cost.

Compounded Annually

The process where the interest earned on an investment is reinvested, and future interest payments are calculated on the principal plus previously earned interest.

Ending Balance

The total amount remaining in an account at the conclusion of a reporting period or after a specific transaction has been completed.

Compounded Annually

Refers to the process where the interest earned on an investment is added to the principal sum at the end of each year, then interest for the next period is calculated on the new principal.