Which of the Following Defines the Government Purchases Multiplier

question 50

Multiple Choice

Which of the following defines the government purchases multiplier?

• A) 1/MPC+ MPI
• B) 1/(1 - MPC)
• C) MPC/(1 - MPC)
• D) (1 - MPC)/MPC

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Definitions:

Absolute Advantage

The ability of a country or individual to produce a good more efficiently than another entity with the same resources.

Trade Deficit

The circumstance where a country's imports outpace its exports, causing a negative trade balance.

Trade Surpluses

Trade surpluses occur when a country's exports exceed its imports over a given period, indicating a net inflow of domestic currency from foreign markets.

Savings Rate

The proportion of income that is saved rather than spent on goods and services.