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:

Indirect Cost

Expenses not directly attributable to the production of goods or services, such as overheads.

Allocate

To allocate means distributing resources or duties for a specific purpose or to particular entities.

Gross Sales

The total sales revenue of a company without any deductions for returns, allowances, or discounts.

Indirect Advertising Costs

Expenses related to advertising that are not directly associated with a specific advertising medium or campaign, such as salaries of marketing staff or overhead costs.