Suppose the MPC in the economy in Figure 10.2 equals 0.8 and the shift from AD0 to AD1 was caused by a decrease in investment of $30 billion. What will the total decrease in aggregate demand be (i.e., AD0 to AD2) as a result of the initial $30 billion decrease?
$150 billion
1/1-MPC∙−30= 1/1−.8∙−30= 1/.2∙−30= 5∙−30=−150