If the MPC = 0

question 119

Multiple Choice

If the MPC = 0.6 and the MPI = 0.25, what is the government purchases multiplier in an open economy?

• A) 1.8
• B) 2.5
• C) 4
• D) 6.7

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Definitions:

Revenue Data

Information related to the income generated from normal business operations, such as sales of goods or services.

Competitive Price-Taker

A market participant who accepts the prevailing market price as given and has no influence over it due to the high level of competition.

Profit

The financial gain attained after subtracting total expenses from total revenues.

Competitive Price-Taker

A business that has no control over the market price and must accept the prevailing market price set by supply and demand forces.