If an Increase in Autonomous Consumption Spending of $25 Million

question 135

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 2.5.

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Definitions:

Accounts Payable

The amount a company owes to suppliers or creditors for goods and services purchased on credit, represented as a liability on the balance sheet.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.

Inventory Change

The difference in inventory levels between two time periods, reflecting purchases, sales, and usage.

Accrued Liabilities

Obligations that a company has incurred but not yet paid for, recognized in accounting to match expenses with the revenues they help to generate.