If the Marginal Propensity to Consume (MPC) Is 0

question 5

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75, a $50 decrease in government spending, other things being equal, would cause equilibrium real GDP to:

• A) increase by $50.
• B) decrease by $50.
• C) increase by $200.
• D) decrease by $200.

Comprehend the use of the degree of operating leverage and how it affects net operating income in response to sales changes.

Evaluate the effect of changes in marketing strategies, including advertising budget adjustments and sales commissions, on net operating income.

Determine the margin of safety in both dollar terms and units.

Appreciate the impact of incorporating new components or features on product costs and monthly sales.

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Definitions:

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