Which of the following best describes the impact of the MPC on AD?
A) the greater the MPC, the greater the change in government purchases required to achieve a given change in AD
B) the greater the MPC, the smaller the fraction of an increase in AD due to an increase in government purchases that is consumption
C) the smaller the MPC, the greater the fraction of an increase in AD due to an increase in government purchases that is consumption
D) the smaller the MPC, the greater the change in government purchases required to achieve a given change in AD
Correct Answer:
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