Multiple Choice
Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD0 to AD1 was caused by a decrease in investment of $20 billion.What will the magnitude of the second decrease in aggregate demand be (for example,AD1 to AD2) ?
A) $15 billion.
B) $20 billion.
C) $80 billion.
D) $120 billion.
Correct Answer:
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