Suppose the Marginal Propensity to Consume (MPC)is 0

question 370

Multiple Choice

Suppose the marginal propensity to consume (MPC) is 0.8 and there is a $2,000 increase in autonomous consumption. Given this information, real GDP will increase by

• A)$1,600.
• B)$2,000.
• C)$2,500.
• D)$10,000.

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Definitions:

Breakeven Point

When the expenses and the revenue are equal, so that there is no profit or loss.

Expense Function

A mathematical expression that describes how costs change with variations in the volume of activity.

Expense Functions

Mathematical formulas used to describe the relationship between expenses and other variables such as production or sales volume.

Revenue Functions

Mathematical functions that represent the revenue generated by selling products or services as a function of their price or quantity.