Multiple Choice
Suppose that the MPC is 0.50 and there is no investment accelerator or crowding-out effects. If government expenditures increase by $20 billion, what happens to aggregate demand?
A) It shifts right by $20 billion.
B) It shifts right by $25 billion.
C) It shifts right by $40 billion.
D) It shifts left by $40 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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