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

Question 71

Multiple Choice

Suppose households save $40 billion less at each level of income, and the MPC = 0.8.How will the aggregate expenditure line will be affected?  


A)  It will shift upward by $40 billion. 
B)  It will shift downward by $40 billion. 
C)  It will shift upward by $200 billion because of the multiplier. 
D)  It will shift downward by $200 billion because of the multiplier.

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