Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD0 to AD1 was caused by a decrease in investment of $20 billion. What will the magnitude of the second decrease in aggregate demand be (for example, AD1 to AD2)?

A. $120 billion.
B. $80 billion.
C. $15 billion.
D. $20 billion.

Answer: C

Economics

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