To Eliminate a Deflationary Gap When the MPC Is 0

question 41

Essay

To eliminate a deflationary gap when the MPC is 0.75 and the deflationary gap is $500 million, investment will need to increase by how much?

---

Definitions:

Expected Profits

Anticipated earnings calculated based on projected revenues, costs, and market conditions.

Interest Rate

The percentage of an amount of money charged for its use over a specified period, often annually, by lenders to borrowers.

Shareholder

An individual or entity that owns one or more shares of stock in a publicly-traded company, making them partial owners.

Firm's Profits

The financial gains a firm obtains after deducting all expenses, taxes, and costs from its total revenues.