Use the Table Below to Answer the Following Questions

question 108

Essay

Use the table below to answer the following questions. The numbers in the table are in billions of dollars.

a.What is the equilibrium level of real GDP?
b.What is the MPC?
c.If investment spending declines by 50, what will happen to equilibrium GDP?
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Definitions:

Machine-Hour

A unit of measure representing the operation of a machine for one hour, often used in allocating manufacturing overhead costs.

Variable Overhead

Costs of overhead that vary with the level of production activity, such as utilities for machinery or materials handling expenses.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production based on a certain activity base.

Variable Component

The part of a cost or expense that varies directly with the level of activity or production volume, in contrast to fixed costs.