Multiple Choice
If net exports fall $40 billion and the MPC is 8/11 and there is a multiplier effect, but no crowding out and no investment accelerator, then
A) aggregate demand falls by 3 x $40 billion.
B) aggregate demand falls by 11/3 x $40 billion.
C) aggregate demand falls by 11/8 x $40 billion.
D) None of the above is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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