Multiple Choice
Suppose that the MPC is 0.60; there is no investment accelerator; and there are no crowding-out effects. If government expenditures increase by $25 billion, then aggregate demand
A) shifts rightward by $62.5 billion.
B) shifts rightward by $50.0 billion.
C) shifts rightward by $32.5 billion.
D) None of the above is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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