Suppose lower expectations lead to a decrease of $240 in desired investment in the economy and the marginal propensity to consume is 0.75.Table 10.2Spending CyclesChange in this Cycle's Spending and IncomeCumulative Decrease in Spending and IncomeFirst-cycle spending-$240-$240Second-cycle spending________________Third-cycle spending________________In Table 10.2, what will be the total decrease in aggregate demand resulting from the initial $240 decrease in investment expenditure after an infinite number of cycles?
A. -$240.00.
B. -$960.00.
C. -$135.00.
D. -$555.00.
Answer: B
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A. 50. B. 200. C. 100. D. 150.
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A) borrowing from the rest of the world. B) lending to the rest of the world. C) running a government budget surplus. D) None of the above is correct.
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A. continued to rise because of the decrease in enforcement of immigration laws. B. continued to rise despite increased crackdowns on illegal immigration. C. began to fall despite a decrease in enforcement of immigration laws. D. began to fall because of increased crackdowns on illegal immigration.