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:

Income Potential

The maximum amount of money someone can earn or a business can generate under current conditions.

Dead Stock

Unsold goods that have been in inventory for a long time and are not expected to be sold due to their obsolescence or lack of demand.

Supplier Relationships

Supplier relationships pertain to the interactions and dealings between a business and its suppliers, involving the negotiation of terms, management of supply, and collaboration for mutual benefit.

Inventory

The total amount of goods or materials held in stock by a company or business.