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Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.90. An increase in government spending of $1 billion would result in an increase in GDP of:
Net Present Value Method
A method of analysis of proposed capital investments that focuses on the present value of the cash flows expected from the investments.
Cash Inflows
Cash inflows refer to the movement of money into a company's accounts from various sources, including sales, financing, or investment.
Rate of Return
The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.
Net Present Value
A financial metric that calculates the value of future cash flows in today’s dollars, assessing profitability of investments or projects.
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