Suppose the Marginal Propensity to Consume (MPC)is 0

question 65

Multiple Choice

Suppose the marginal propensity to consume (MPC) is 0.9 and there is a $3,000 increase in planned investment. Given this information, real GDP will increase by

• A)$3,000.
• B)$2,700.
• C)$30,000.
• D)$3,333.

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Definitions:

Cost of Debt

The effective rate that a company pays on its current debt, which can include bank loans, bonds, and other forms of debt.

Repurchasing Shares

The act of a company buying back its own stocks from the marketplace, which can affect the company’s share price and equity structure.

Equity Firm

A company that invests in businesses, typically by purchasing equity stakes, with the aim of earning returns through dividends or capital appreciation.

Shares Outstanding

The total number of shares of a company that are currently owned by shareholders, including both public investors and company officers or insiders.