If the Government Decreased Its Purchases of Goods and Services

question 78

Multiple Choice

If the government decreased its purchases of goods and services by $4,000, and this resulted in an eventual decrease in GDP and income of $10,000, the MPC would be equal to

• A) 2.5.
• B) 1.5.
• C) 0.6.
• D) 0.4.

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Definitions:

Buffalo Meat

The meat derived from buffaloes, considered a source of protein and widely consumed in certain cultures and countries.

Surplus

The situation in which the quantity of a product supplied exceeds the quantity demanded at the current price; often leads to downward pressure on prices.

Shortage

A situation in which the demand for a product or service exceeds the supply available at a specific price.

Bushels

A measure of volume used primarily for agricultural commodities, varying in size depending on the product measured.