Assume That the MPC Is 0

Multiple Choice

Assume that the MPC is 0.8. Assume that the total crowding-out effect is $25 billion. How will an increase in government purchases of $9 billion shift the AD curve?

A) It will shift the AD curve right by $25 billion.
B) It will shift the AD curve left by $25 billion.
C) It will shift the AD curve right by $20 billion.
D) It will shift the AD curve left by $20 billion