The federal government buys $10 million worth of aircraft engines from General Motors.If the MPC is .80 what will be the impact on aggregate demand, other things being equal?
A) Aggregate demand will increase $8 million.
B) Aggregate demand will increase $10 million.
C) Aggregate demand will increase $12.5 million.
D) Aggregate demand will increase $18 million.
E) Aggregate demand will increase $50 million.
Correct Answer:
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