By How Much Would Government Purchases Have to Change If

question 101

Multiple Choice

By how much would government purchases have to change if the government wanted to increase income by $1,000 and the MPC were 0.9?

• A)$100
• B)$900
• C)$1,000
• D)$10,000/9
• E)$10,000

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal amount of the asset's cost to each year of its useful life.

Actuarial Loss

A financial shortfall that occurs when the actual experience of an insurer or pension plan differs negatively from actuarial assumptions, resulting in higher costs or liabilities.

Manufacturing Plant

A facility used for the production of goods through the combination of human labor, machinery, and processes.

Other Comprehensive Income

This encompasses earnings, revenues, expenses, and gains or losses that are not included in net income, reflecting the total non-owner changes in equity.