If the MPC in an Economy Is

question 113

Multiple Choice

If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion at each price level by:

• A)increasing government spending by $25 billion.
• B)increasing government spending by $80 billion.
• C)decreasing taxes by $25 billion.
• D)decreasing taxes by $100 billion.

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Definitions:

Materiality Principle

An accounting principle that states financial reports should include all items significant enough to influence the decision-making process of an individual reading the report.

Charging to Expense

The process of recognizing a cost as an expense in the income statement during the period in which it is incurred.

Historical Cost Principle

An accounting principle requiring all financial items to be recorded based upon original cost, without adjusting for inflation or market value.

Primary Quality

Fundamental or inherent characteristics that determine the value or usefulness of something.