If the MPC = 0

question 59

Multiple Choice

If the MPC = 0.80,the total change in spending resulting from an initial $500 decrease in aggregate spending will be

• A)$300.
• B)$800.
• C)$2500.
• D)$833.

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Definitions:

Market Equilibrium

A condition in which the quantity of goods supplied is equal to the quantity demanded, often resulting in an optimal price for products or services.

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price determination by supply and demand.

Equilibrium Output

The level of output where the quantity of goods produced equals the quantity of goods consumed, and the market is in balance.

Total Revenues

The full revenue obtained from the sale of goods or services, before taking out any expenditures.