If MPC Is 0

question 5

Multiple Choice

If MPC is 0.8,what size effect would a $200 billion increase in government purchases have on the "first round" of induced added consumption?

• A)$80 billion
• B)$160 billion
• C)$200 billion
• D)$800 billion

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Definitions:

Consumer Income

The total amount of money earned by individuals or households that can be used for saving, spending, or investing.

MU y/ Pᵧ

MU y/ Pᵧ represents the marginal utility of good "y" divided by its price, a concept in economics used to analyze consumer choice, indicating the additional satisfaction per unit of currency spent on that good.

Maximize Utility

The economic principle of selecting the option that yields the highest satisfaction or benefit.

Quantities Y

Often refers to the output level or quantity of goods produced in economic models or equations.