If the government decides to spend an extra $4 billion on fighter jets that they would otherwise have spent on computers, and the MPC = 0.75, what is the effect on AD?
A) AD increases by $20 billion.
B) AD increases by $16 billion.
C) AD increases by $4 billion.
D) AD does not change.
Correct Answer:
Verified
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Q56: If the MPC = 3/4, an increase
Q57: If MPC = 0.75, a $40 billion
Q58: If MPC = 0.75, a $40 billion
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