If the Marginal Propensity to Consume (MPC) Is 0

question 53

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75, and if the goal is to increase real GDP by $400 million, then by how much would government spending have to change to generate this increase in real GDP?

• A) $140 million.
• B) $100 million.
• C) $200 million.
• D) $400 million.

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Definitions:

Iso-Profit Line

A graphical representation showing combinations of inputs that result in the same level of profit, used in economic and operational modeling.

Maximization Problem

A type of optimization problem that seeks the highest possible value of an objective function under given constraints.

Feasible Region

The set of all possible points that satisfy a system of constraints, typically within the context of optimization problems.

Feasible Region

In optimization and linear programming, the set of all possible points that satisfy the problem's constraints, representing valid solutions.