Multiple Choice
Suppose the MPC is .75.There are no crowding out or investment accelerator effects.If the government increases expenditures by $200 billion how far does aggregate demand shift? If the government decreases taxes by $200 billion how far does aggregate demand shift?
A) $800 billion and $800 billion
B) $800 billion and $600 billion
C) $600 billion and $600 billion
D) $600 billion and $450 billion
Correct Answer:
Verified
Correct Answer:
Verified
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