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3 February, 18:39

If investment increases by $10 billion, and the economy's MPC is 0.8, the aggregate demand curve will shift: Group of answer choicesleftward by $50 billion at each price level. rightward by $10 billion at each price level. rightward by $50 billion at each price level. leftward by $40 billion at each price level.

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  1. 3 February, 19:00
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    rightward by $50 billion at each price level.

    Explanation:

    Any increase in aggregate expenditures resulting from changes in variables other than prices, will produce a rightward shift of the aggregate demand curve.

    MPC = 0.8, therefore MPS = 0.2

    the total change in the aggregate demand curve = $10 billion / 0.2 = 50 billion
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