Figure 12-3 -Refer to Figure 12-3.Suppose That Government Spending Increases,shifting Up the Increases,shifting

question 138

Multiple Choice

Figure 12-3
-Refer to Figure 12-3.Suppose that government spending increases,shifting up the aggregate expenditure line.GDP increases from GDP₁ to GDP₂,and this amount is $200 billion.If the MPC is 0.8,then what is the distance between N and L or by how much did government spending change?

• A)$16 billion
• B)$40 billion
• C)$200 billion
• D)$1,000 billion

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Definitions:

Earnings Per Share

A metric used to determine a portion of a company's profit allocated to each outstanding share of common stock, calculated as net income divided by the number of shares.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with fixed dividends.

Return on Investment

A measure of the profitability and efficiency of an investment, calculated by dividing the gain from the investment by its cost.

EDGAR

The Electronic Data Gathering, Analysis, and Retrieval system used by the United States Securities and Exchange Commission (SEC) for the submission of corporate filings.