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If a Spending Shock Reduces Aggregate Expenditure by $600 Million

Question 28

Multiple Choice

If a spending shock reduces aggregate expenditure by $600 million and the multiplier is 2.5, then the IS curve will shift:

A) right by $240 million.
B) left by $1,500 million.
C) left by $600 million.
D) right by $600 million.

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