If the Marginal Propensity to Consume (MPC)is 0

question 398

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75 and government purchases increase by $200 billion, then

• A)equilibrium real Gross Domestic Product (GDP)will increase by $800 billion.
• B)equilibrium real Gross Domestic Product (GDP)will increase by $200 billion.
• C)equilibrium real Gross Domestic Product (GDP)will increase by $50 billion.
• D)the effect on equilibrium real Gross Domestic Product (GDP)cannot be determined from the given information.

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Definitions:

Well-Being

The state of being comfortable, healthy, or happy, reflecting the overall quality of life.

Well-Being

A comprehensive measure of an individual's overall health, happiness, and life satisfaction.

Gini Coefficient

An indicator of how unevenly income is distributed in a population, with 0 representing complete equality and 1 signifying absolute inequality.