If the MPC Is 0

question 113

Multiple Choice

If the MPC is 0.75, the government spending multiplier is

• A) 4.
• B) 3.
• C) 2.5.
• D) 1.75.

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Definitions:

Short-Term Receivables

Current assets representing amounts due to be received by a company within a short period, typically within a year, from customers or clients.

Commercial Paper

Commercial paper is an unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Days' Cash on Hand Ratio

A liquidity metric that calculates how many days a company can operate using its available cash without external financing.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.