In a Simple, Private Economy, Suppose That the MPC Is

question 5

Multiple Choice

In a simple, private economy, suppose that the MPC is .8 and investment rises by $20 million.At the new equilibrium, how much will saving have increased?

• A)$8 million 
• B)$16 million 
• C)$20 million 
• D)$80 million 
• E)$100 million

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Definitions:

Income Statement

A financial statement showing a company's revenue and expenses, indicating the net profit or loss over a specific period.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers and depreciation of equipment.

Direct Labor

The cost associated with employees who directly contribute to the manufacturing or production of goods, redefined as the labor directly tied to the creation of a product.

Raw Material

The basic materials and substances that are used in the production of goods, typically transformed through manufacturing processes.