Suppose That the MPC Is 0

question 21

Multiple Choice

Suppose that the MPC is 0.7,there is no investment accelerator,and there are no crowding-out effects.If government expenditures increase by $30 billion,then aggregate demand

• A)shifts rightward by $100 billion.
• B)shifts rightward by $51 billion.
• C)shifts rightward by $170 billion.
• D)shifts rightward by $72.8 billion.

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Definitions:

Per-Unit Cost

The cost associated with producing or acquiring one unit of a product or service, calculated by dividing the total cost by the number of units.

Profit-Maximizing Output

The level of production at which a company can make the highest profit, considering the cost of production and market price.

Maximum Profit

The highest possible financial gain that can be achieved from business activities after all costs are subtracted.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.