Suppose the federal government buys $10 million worth of aircraft engines from an aircraft engine building company. If the marginal propensity to consume (MPC) is 0.80, other things constant, aggregate demand will
A) increase by $8 million
B) increase by $12.5 million.
C) increase by $18 million.
D) increase by $50 million.
E) increase by $5 million
Correct Answer:
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