An Increase in Government Spending by $100 Would, If the MPC

question 13

Multiple Choice

An increase in government spending by $100 would, if the MPC = 0.90, result in an increase in real GDP by:

• A) $1,000.
• B) $9,000.
• C) $900.
• D) $190.

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Definitions:

Probability Density Functions

Functions that describe the relative likelihood for a continuous random variable to take on a given value.

Continuous Random Variables

Variables that can take an infinite number of values within a given range, often associated with measurements in time, distance, or temperature.

Area Under the Curve

A measure used in various statistical analyses to quantitatively summarize the shape of a curve, often related to the performance of a model or the distribution of data.

Standard Normal Random Variable

A random variable that has a mean of zero and a standard deviation of one, following a normal distribution.