Given Full-Employment Output = $2,800, Equilibrium Real GDP = $2,500

question 104

Multiple Choice

Given full-employment output = $2,800, equilibrium real GDP = $2,500, and MPS = 0.25, which of the following changes would most likely bring the economy to a full-employment level of real GDP?

• A) $300 decrease in taxes.
• B) $75 increase in government spending.
• C) $75 decrease in taxes.
• D) $300 increase in government spending.
• E) $75 decrease in government spending.

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Definitions:

Waste Elimination

The process of identifying and removing non-value-added activities or materials in a production or business operation to improve efficiency and reduce costs.

Activity-based Costing

An approach to costing that focuses on activities as the fundamental cost drivers, and assigns costs to products and services based on their consumption of these activities.

Manufacturing Overhead Costs

Costs in the manufacturing process that are not directly attributable to the specific product, including equipment maintenance and factory supervision.

Quality Improvement Process

Continuous efforts to enhance product quality, process efficiencies, or customer satisfaction.