Assume That There Is No Accelerator Affect

question 44

Multiple Choice

Assume that there is no accelerator affect.The MPC = 3/4.The government increases both expenditures and taxes by $600.The effect of taxes on aggregate demand is 3/4 the size of that created by government expenditures alone.The crowding out effect is 1/5 as strong as the combined effect of government expenditures and taxes on aggregate demand.How much does aggregate demand shift by?

• A)$1480
• B)$480
• C)$160
• D)None of the above is correct.

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Definitions:

Precipitation

Any form of water - liquid or solid - falling from the atmosphere to the Earth's surface, including rain, snow, sleet, and hail.

Evaporation

The process by which water transforms from a liquid to a gas or vapor state, often driven by heat from the sun, playing a critical role in the water cycle.

Drought

An extended duration of significantly reduced precipitation, resulting in a scarcity of water.

Aral Sea

A lake located in Central Asia that has significantly shrunk since the 1960s due to the diversion of the rivers that fed it for agricultural irrigation.