If the MPC =

question 21

Multiple Choice

If the MPC = .80, and investment rises from $100 to $150, real GDP will increase by:

• A)$50.
• B)$125.
• C)$20.
• D)$250.
• E)$200.

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Definitions:

Actual Production

The measure of the quantity of goods or services produced by a company during a specific period.

Flexible Budget

A flexible budget adjusts according to the actual levels of activity experienced, allowing for more accurate comparisons of budgeted to actual performance.

Static Budget

A budget that is set for a specific level of activity and does not change or adjust with the actual level of activity achieved.

Fixed Manufacturing Overhead

The set costs involved in producing a product that do not change with the level of production, such as rent, salaries, and utilities.