Scenario 10

question 131

Multiple Choice

Scenario 10.2?A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7. Assume that the economy is initially in equilibrium.
-Refer to Scenario 10.2. What will happen to the equilibrium real GDP if a tourist visits the country and spends $100 that she brought with her?

• A) It will not change.
• B) It will increase by $100.
• C) It will increase by $200.
• D) It will increase by $143.
• E) It will increase by $90.

---

Definitions:

Corporate Form

A legal structure for organizing a business as a separate entity from its owners, providing limited liability and other legal benefits.

Shareholder's Liability

The financial responsibility of the shareholders of a company is typically limited to their investment in the company's shares.

Retained Earnings

Retained Earnings represent the cumulative amount of net income a company retains, rather than distributing to shareholders as dividends.

Restricted

Assets or funds that are reserved for a specific purpose and cannot be freely used for other expenses or investments.