If the MPC = 5/6, What Is the Government Purchases

question 97

Multiple Choice

If the MPC = 5/6, what is the government purchases multiplier?

• A)1/6
• B)5/6
• C)6/5
• D)6

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Definitions:

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The proportionality ratio of debt to equity in the context of funding a company's assets.

Optimal Capital Structure

The best mix of debt, equity, and other financial instruments that maximizes a company's value while minimizing its cost of capital.

Increased Benefit

An enhancement or improvement in the terms or amount of an insurance or investment product's payouts.