Use the Information Below to Answer the Following Questions

question 17

Multiple Choice

Use the information below to answer the following questions.
Fact 27.3.1
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.5 and real GDP is $200 billion. Businesses increase investment by $2 billion.
-Consider Fact 27.3.1. The increase in real GDP is

• A)$2 billion.
• B)$4 billion.
• C)$202 billion.
• D)$404 billion.
• E)$1.6 billion.

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Definitions:

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit, determined where marginal cost equals marginal revenue.

Total Output

The complete quantity of goods or services produced in a specific time period by an economy or firm.

Labor Prices

The wages or compensation paid to employees for their labor or work performed.

Profit-maximizing Firm

A company that seeks to achieve the highest possible profit through its operations, focusing on revenue enhancement and cost reduction.