Assume That the MPC Is 0

question 115

Multiple Choice

Assume that the MPC is 0.9. If government purchases increase by $100, equilibrium output ________; and if taxes increase by $100, equilibrium output ________.

• A) increases by $1,000; decreases by $1,000
• B) increases by $900; decreases by $1,000
• C) increases by $1,000; decreases by $900
• D) increases by $400; decreases by $400

---

Definitions:

Total Cost of Ownership

The purchase price of an asset plus the costs of operation, considering all financial aspects of acquiring, operating, and maintaining it over its lifetime.

Competitive Advantage

A unique attribute or condition that allows an organization to outperform its competitors, potentially leading to greater sales or margins.

Geographical Location

The physical place or position of a person or thing as determined by its coordinates on the Earth's surface.

Purchased Material

Items or goods a company buys from external suppliers for use in its manufacturing process.