If MPC = 0

Multiple Choice

If MPC = 0.8, a $200 billion increase in government purchases would have what size effect on the "first round" of induced added consumption, and what total effect on AD?

A) ​increase "first round" consumption by $80 billion; increase AD by $400 billion
B) ​increase "first round" consumption by $160 billion; increase AD by $1 trillion
C) ​increase "first round" consumption by $200 billion; increase AD by $1 trillion
D) ​increase "first round" consumption by $800 billion; increase AD by $4 trillion