If an Increase in Autonomous Consumption Spending of $25 Million

question 67

Multiple Choice

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP, then

• A)the MPC is 0.25.
• B)the MPC is 0.75.
• C)the MPC is 0.8.
• D)the MPC is 0.9.
• E)the MPC is 2.5.

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Definitions:

Intrinsic Value

The actual, inherent worth of an asset or company, not necessarily matching its current market value.

Zero-Coupon Bond

A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Coupon Rate

A bond's yearly interest payout rate, described as a percentage of its face value.

Coupon Rate

The annual interest rate paid on a bond's face value, indicating the amount of periodic payments to the bondholder.