If the MPC Is 2/3 Then the Multiplier Is

question 379

Multiple Choice

If the MPC is 2/3 then the multiplier is

• A)3/2, so a $100 increase in government spending increases aggregate demand by $150.
• B)3/2, so a $100 increase in government spending increases aggregate supply by $150.
• C)3, so a $100 increase in government spending increases aggregate demand by $300.
• D)3, so a $100 increase in government spending increases aggregate supply by $300.

Identify the factors that influence economic choices and behaviors.

Grasp the basic postulate of economics that incentives matter.

Understand the implications of economizing behavior and marginal changes.

Recognize the value of information in making economic decisions.

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Definitions:

Labor Demand Curve

A graphical representation of the quantity of labor that employers are willing and able to hire at different wage rates.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital.

Variable Input

An input in the manufacturing process that changes in quantity relative to the level of production output.

Profit-Maximizing Level

The point at which a company achieves the highest profit possible, considering the level of output, costs, and pricing.