(Advanced analysis) Assume that the MPC is .8 in an economy that has an aggregate supply curve with a slope of 1.Also,suppose that the price level is flexible downward.A decrease in investment spending of $10 billion will shift the aggregate demand curve leftward by:
A) $50 billion and decrease real GDP by $50 billion.
B) $50 billion and decrease real GDP by $25 billion.
C) $10 billion and decrease real GDP by $10 billion.
D) $10 billion and decrease real GDP by $25 billion.
Correct Answer:
Verified
Q120: An increase in wealth from a substantial
Q122: (Advanced analysis)Assume that the MPS is .33
Q133: The interest-rate effect is one of the
Q136: Other things equal, an increase in productivity
Q145: The aggregate expenditures model and the aggregate
Q147: A negative GDP gap can be caused
Q151: The equilibrium price level and equilibrium level
Q153: In deriving the aggregate demand curve from
Q154: An increase in net exports will shift
Q156: When deriving the aggregate demand (AD) curve
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