Assume the MPC Is 0

question 26

Multiple Choice

Assume the MPC is 0.80.The change in total spending for the economy due to a $200 billion government spending increase is

• A)$160 billion.
• B)$200 billion.
• C)$800 billion.
• D)$1,000 billion.

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Definitions:

Expected Useful Life

The estimated length of time a fixed asset will be used in normal operations.

Placed in Service

Refers to the point in time when an asset begins to be used by a business for its intended purpose, marking the start of depreciation.

Asset

Items of value owned by a company, including tangible and intangible resources, that can be converted into cash.

Second-Year Depreciation

The depreciation expense allocated in the second year of an asset's useful life, considering the chosen depreciation method.