Assume That GDP = $10,000 and the MPC = 0

question 4

Multiple Choice

Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase GDP by 30 percent, and they want to change taxes and government spending by equal amounts, how much would government spending and taxes each need to increase?

• A) $300
• B) $750
• C) $1,000
• D) $3,000

---

Definitions:

Gallons

A unit of measurement for volume primarily used in the United States to measure liquids, with 1 gallon equaling approximately 3.785 liters.

Utility Function

A mathematical representation used in economics to describe how the quantities of goods or services consumed lead to a level of consumer satisfaction or utility.

Whisky Consumption

Whisky Consumption refers to the amount of whisky that is consumed over a certain period, often considered in economic studies of consumer behavior and market demand.

Gallons

A unit of volume used primarily in the United States to measure liquids.