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:

Break-Even Time

The period it takes for a business or project to generate enough revenue to cover all its costs and start producing a profit.

Product Development Cycle

The series of stages a product goes through from conception and development to market launch and beyond.

Incremental Projects

Projects that are undertaken to bring about small, incremental improvements or additions to existing products, services, or processes.

Order Receipt Time

The time that elapses from when an order is placed to when it is received.