Suppose Real GDP Increases from $13 Trillion to $14 Trillion

question 94

Multiple Choice

Suppose real GDP increases from $13 trillion to $14 trillion and, as a result, consumption expenditure increases from $13 trillion to $13.75 trillion. This result implies that the MPS equals

• A) 0.75.
• B) 0.25.
• C) 0.
• D) some amount that cannot be determined without more information.

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Definitions:

Chronic Budget Deficits

Persistent shortfalls in a government's budget where expenditures surpass revenues over an extended period.

Unfunded Liabilities

Financial obligations that do not have enough funds set aside to cover them, often relating to pensions or other long-term commitments.

Monetary Policy

The management of the money supply and interest rates by the central bank to influence economic growth and stability.

Public Choice Economists

Economists who apply economic principles and methodologies to study and analyze political behavior and public policies.