Assume the MPC Is 0

question 87

Multiple Choice

Assume the MPC is 0.75.To eliminate an AD shortfall of $200 billion,the government should

• A)Decrease spending by $50 billion.
• B)Increase spending by $50 billion.
• C)Increase taxes by $66.7 billion.
• D)Increase spending by $800 billion.

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Definitions:

Cash Flow To Shareholders

The amount of cash a company distributes to its shareholders, typically through dividends and share buybacks.

Free Cash Flow

The amount of cash generated by a business after accounting for operational expenses and capital expenditures.

Interest Income

Income earned from deposit accounts or investments that pay interest, such as bonds or savings accounts.

Capital Gains

The profit earned from the sale of an asset or investment when the selling price exceeds the original purchase price.