If Net Exports Decrease by $10 Billion and the MPC

question 48

Multiple Choice

If net exports decrease by $10 billion and the MPC is 0.9,what is the ultimate change in GDP?

• A) $100 billion
• B) -$10 billion
• C) $10 billion
• D) -$100 billion
• E) -$9 billion

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Definitions:

Radio

A technology that uses radio waves to carry information, such as sound, by systematically modulating properties of electromagnetic energy waves transmitted through space.

Comparative Advantage

The ability of an individual or economy to produce goods or services at a lower opportunity cost than others, which forms the basis for trade.

Radios

Radios are devices that receive and transmit signals using radio waves to enable wireless communication over distances.

Opportunity Cost

The value of the next best alternative that must be forgone as a result of choosing one option over another.