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Suppose That There Are No Crowding Out Effects and the MPC

question 25

Essay

Suppose that there are no crowding out effects and the MPC is 0.9.By how much must the government increase expenditures to shift the aggregate demand curve right by R10 billion?


Definitions:

Amortized

The process of gradually reducing the cost or value of an asset, or the repayment of a debt over a period of time, through regular payments.

Patents

Patents are government grants that give inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention for a certain period.

Capital Expenditure

Resources utilized by a business to purchase, improve, and upkeep tangible assets like real estate, factories, or machinery.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities or equity on a company’s balance sheet.

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