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Suppose the MPC Is 0

Question 55

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Suppose the MPC is 0.60.Assume there are no crowding out or investment accelerator effects.If the government increases expenditures by $200 billion,then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion,then by how much does aggregate demand shift to the right?


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

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