Question

question 88
2 pts
if the mpc is 0.4 and there are no crowding - out effects, then an increase in aggregate demand of $252 will eventually shift the aggregate demand curve to the right by (answer to 2 decimal places)

Explanation:

Step1: Calculate spending multiplier

The spending multiplier formula is $\frac{1}{1-MPC}$. Substitute $MPC=0.4$:
$\frac{1}{1-0.4} = \frac{1}{0.6} \approx 1.6667$

Step2: Compute total AD shift

Multiply initial increase by multiplier:
$252 \times \frac{1}{0.6} = 252 \times 1.6667$

Answer:

420.00