If the MPC Is 0

question 58

Multiple Choice

If the MPC is 0.75, and the government cuts spending by $100 billion, the overall effect on GDP will be:

• A) a decrease of $400 billion.
• B) an increase of $250 billion.
• C) a decrease of $250 billion.
• D) an increase of $400 billion.

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Definitions:

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, used to check the balance of debits and credits.

Fees Earned

Income received from providing services, typically recorded when the service is rendered, not when the payment is received.

Supplies Expense

Expenditures related to consumable supplies used in the operating activities of a business during a specific period.

Dividends

Payments made by a corporation to its shareholder members. It's often quoted as the amount each share receives (dividends per share).