Suppose the MPC Is

Multiple Choice

Suppose the MPC is .60.Assume 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 does aggregate demand shift?

A) $300 billion and $180 billion
B) $300 billion and $300 billion
C) $500 billion and $300 billion
D) $500 billion and $500 billion