Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11
-Refer to Figure 8.11. Equilibrium aggregate output will increase to $250 million if the
A) MPC increases to 0.8.
B) MPS increases to 0.8.
C) multiplier increases to 8.
D) all of the above

Question

Refer to the information provided in Figure 8.11 below to answer the questions that follow.  Figure 8.11
-Refer to Figure 8.11. Equilibrium aggregate output will increase to $250 million if the
A) MPC increases to 0.8. 
B) MPS increases to 0.8. 
C) multiplier increases to 8. 
D) all of the above

Quizplus · Accepted Answer

An increase in the marginal propensity to consume (MPC) to 0.8 would increase the multiplier effect, leading to a higher equilibrium aggregate output.

Refer to the Information Provided in Figure 8