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:

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Cash Flows

The overall volume of cash inflows and outflows within a corporation, impacting its availability of liquid funds.

Free Cash Flow

A financial metric that measures the amount of cash generated by a company after accounting for capital expenditures.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating financial performance.