If the MPC Is Equal to

question 16

Multiple Choice

If the MPC is equal to .75 and net taxes, government spending, investment and net exports are all autonomous, then a $1 billion dollar decrease in net taxes will

• A)have no effect on real GDP
• B)increase real GDP by $1 billion
• C)increase real GDP by $2 billion
• D)increase real GDP by $3 billion
• E)increase real GDP by $4 billion

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Definitions:

Total Revenue

The overall amount of money generated by a business from its sales activities before any expenses are subtracted.

Total Revenue

The total income received by a firm from the sale of goods or services before any expenses are deducted.

Price Range

Price Range refers to the spread between the highest and lowest selling prices of a product or service in the market.

Unit Elastic

A situation in which a percentage change in price leads to an equivalent percentage change in quantity demanded, illustrating a direct one-to-one relationship.