If Households Save $40 Billion Less at Each Level of Income

Multiple Choice

If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

A) intersect the 45-degree line at a real GDP of $40 billion
B) shift upward by $40 billion
C) shift downward by $40 billion
D) shift upward by $200 billion because of the multiplier mechanism
E) shift downward by $200 billion because of the multiplier mechanism