If the MPC = 0

question 14

Multiple Choice

If the MPC = 0.8 and both government purchases and autonomous net taxes fall by $100 billion, by how much does the equilibrium level of real GDP demanded change (assuming neither income taxes nor net exports exist) ?

• A)-$100 billion
• B)+$100 billion
• C)-$500 billion
• D)+$500 billion
• E)+$200 billion

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Definitions:

Average Cost

The sum of all production expenses divided by the quantity of items made, showing the expense for each unit of product.

Purely Competitive Equilibrium

A market state characterized by a perfect match between supply and demand, resulting in an optimal distribution of resources without any single buyer or seller influencing the price.

Monopoly Equilibrium

The price and output level determined in a market where a single seller controls the entire supply of a good or service.

Level Of Output

The total quantity of goods or services produced by a firm or economy at a given time, often analyzed to assess economic performance or business productivity.