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QUESTION
A $100 billion decrease in government purchases in an economy, other things constant, would:increase aggregate demand by approximately $400 billion...
- A $100 billion decrease in government purchases in an economy, other things constant, would:
- a.increase aggregate demand by approximately $400 billion if the marginal propensity to consume were 0.4.
- b.increase aggregate demand by $ approximately 200 billion if the marginal propensity to consume were 0.5.
- c.increase aggregate demand by approximately $500 billion if the marginal propensity to consume were 0.8
- d.decrease aggregate demand by approximately $40 billion if the marginal propensity to consume were 0.4
- e.decrease aggregate demand by approximately $300 billion if the marginal propensity to consume were 2/3
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