Advanced Placement (AP), 10.12.2020 17:00 jacksonsmith0
Assume the marginal propensity to consume is 0.8. How will a decrease in taxes of $100 billion and a decrease in government spending of $100 billion affect aggregate demand?
A. Aggregate demand will decrease by $900 billion.
B. Aggregate demand will decrease by $500 billion.
C. Aggregate demand will decrease by $400 billion.
D. Aggregate demand will decrease by $100 billion.
E Aggregate demand will not change.
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Assume the marginal propensity to consume is 0.8. How will a decrease in taxes of $100 billion and a...
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