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Exhibit 11-7 Aggregate Demand and Supply Model Beginning at Equilibrium

Question 130

Multiple Choice

Exhibit 11-7 Aggregate demand and supply model Exhibit 11-7 Aggregate demand and supply model Beginning at equilibrium E<sub>1</sub> in Exhibit 11-7, assume the marginal propensity to consume (MPC) is 0.90 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the: A) left by $1,000 billion. B) right by $1,000 billion. C) right by $900 billion. D) left by $900 billion. Beginning at equilibrium E1 in Exhibit 11-7, assume the marginal propensity to consume (MPC) is 0.90 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:


A) left by $1,000 billion.
B) right by $1,000 billion.
C) right by $900 billion.
D) left by $900 billion.

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