A $1 Billion Increase in Investment Will Cause A

question 42

Multiple Choice

A $1 billion increase in investment will cause a:

• A)(1/MPS) billion increase in equilibrium GDP.
• B)(MPS) billion increase in equilibrium GDP.
• C)(1 - MPC) billion increase in equilibrium GDP.
• D)(MPC - MPS) billion increase in equilibrium GDP.

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production process, used as a measure for allocating labor costs to products or services.

Factory Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for managers.

Overapplied Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Overhead Incurred

The actual indirect costs experienced by a company during production, including utilities, rent, and salaries of employees not directly involved in production.