If the government decides to spend an extra $5 billion on fighter jets that they would otherwise have spent on road construction, and the MPC = 0.75, what is the effect on AD?
A) It has no effect.
B) It increases by $5 billion.
C) It increases by $15 billion.
D) It increases by $20 billion.
Correct Answer:
Verified
Q44: If net exports increase by $10 billion
Q45: If investment decreases by $20 billion and
Q46: A $100 billion decrease in government purchases
Q47: If MPC = 0.75, a $40 billion
Q48: In order for the economy pictured to
Q50: Assume that there is a $20 billion
Q51: If government policy makers were worried about
Q52: If MPC = 0.8, a $200 billion
Q53: If the government decides to spend an
Q54: If the marginal propensity to consume is
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents