Assume the MPC Is 0

question 35

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:

Estimated Ending Inventory

An approximation of the value or quantity of inventory that a company has on hand at the end of an accounting period, calculated for planning or valuation purposes.

Gross Profit Rate

The percentage of revenue that exceeds the cost of goods sold, indicating how efficiently a company uses its resources to produce goods.

Ending Inventory

The overall worth of items ready for sale at the end of a fiscal period.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from its total revenues.