The MPC Is 0

question 93

Multiple Choice

The MPC is 0.90 and there are no income taxes or imports.If government expenditures on goods and services increases by $2.0 billion, after the multiplier effect works out, aggregate expenditure increases by

• A) $1.8 billion.
• B) $2.22 billion.
• C) $10 billion.
• D) $20 billion.
• E) $2.0 billion.

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Definitions:

Repayment Patterns

The trends or habitual ways in which a borrower returns borrowed money to the lender, often analyzed in finance to assess risk and set terms.

Debt And Equity

The two main types of financing for companies, where debt involves borrowing money to be repaid and equity involves selling a stake in the company.

Capacity

The highest amount of production a business can maintain during a specific timeframe under regular conditions.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender in case of default.