Suppose the Economy Is Currently at Equilibrium at $1 Trillion

question 47

Multiple Choice

Suppose the economy is currently at equilibrium at $1 trillion, and the MPC is 0.6.And suppose there is a $100 billion decrease in government purchases of goods and services.Which of the following is the new equilibrium?  

• A) $400 billion 
• B) $600 billion 
• C) $750 billion 
• D) $1.4 trillion

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Definitions:

Salvage Value

The approximated financial return of an asset at the termination of its usefulness.

Operating Costs

Expenses associated with the day-to-day functioning of a business, excluding the cost of goods sold.

Flat Fee

A pricing structure where a single fixed charge is applied for a service, irrespective of usage or time required.

Intangible Benefits

These are advantages that cannot be easily measured in monetary terms, such as brand reputation or employee morale.