Suppose Real GDP Is $800 Billion When the MPC Is

question 14

Multiple Choice

Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:

• A)$600 billion.
• B)$650 billion.
• C)$680 billion.
• D)$730 billion.
• E)$800 billion.

---

Definitions:

Independent Events

Two or more events that do not affect each other's outcomes, meaning the occurrence of one event does not change the probability of the other.

Babies Born

Refers to the total number of live births in a specified population, area, or period, often used in demographic studies.

Same Sex

Referring to individuals of the same gender identity or sexual orientation, often used in discussions of rights and relationships.

Proportion

A statistical measure that reflects the size of one part in relation to a whole, often expressed as a fraction or percentage.