Suppose the Overall MPC Is 0

question 10

Multiple Choice

Suppose the overall MPC is 0.9. If a $2 billion increase in imports to the United States will lead to a $10 billion decrease in GDP, the value of the marginal propensity to import must be

• A) 0.1.
• B) 0.2.
• C) 0.5.
• D) 0.8.

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Definitions:

Basis

The amount of investment in property for tax purposes, used to determine the gain or loss on the sale, exchange, or other disposition of the property.

Ownership Interest

Ownership interest refers to the rights and claims an individual or entity has on a property or business, often represented in terms of shares or equity.

Fiscal-Year End

The completion of a one-year, or 12-month, accounting period used by governments and businesses for financial reporting and budgeting.

Automatic Extension

An extension of time granted by the IRS for filing tax returns without needing to file a request form.