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Suppose the MPC in the Economy in Figure 10

Question 115

Multiple Choice

Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD<sub>0</sub> to AD<sub>1</sub> was caused by a decrease in investment of $20 billion.What will the magnitude of the second decrease in aggregate demand be (for example,AD<sub>1</sub> to AD<sub>2</sub>) ? A) $15 billion. B) $20 billion. C) $80 billion. D) $120 billion. Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD0 to AD1 was caused by a decrease in investment of $20 billion.What will the magnitude of the second decrease in aggregate demand be (for example,AD1 to AD2) ?


A) $15 billion.
B) $20 billion.
C) $80 billion.
D) $120 billion.

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