Assume the MPC is 0.75,taxes increase by $100 billion,and government spending increases by $100 billion.Aggregate demand will

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The MPC of 0.75 means that for every $1 increase in income, people will spend $0.75. With taxes increasing by $100 billion, disposable income will decrease by $100 billion. The MPC of 0.75 multiplied by the $100 billion decrease in disposable income means that consumer spending will decrease by $75 billion. However, the increase in government spending by $100 billion will offset this decrease in consumer spending, resulting in an overall increase in aggregate demand of $100 billion.

Assume the MPC Is 0