Assume an MPC of 0

question 107

Multiple Choice

Assume an MPC of 0.75.The change in total spending for the economy as a result of a $20 billion new government spending injection would be:

• A) $80 billion.
• B) $27 billion.
• C) $22 billion.
• D) $15 billion.

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Definitions:

Credit Sales

Sales made by a business where the payment is deferred to a later date, enabling customers to purchase goods or services on credit.

Cash Receipts

The collection of money, including coins, notes, electronic payments, etc., by a business from its customers or other transactions.

Invoice Cost

The initial price listed on an invoice for purchased goods or services, not including any additional fees or discounts.

Zero-based Budgeting

A budgeting method where all expenses must be justified for each new period, starting from a "zero base," without assuming that past budget allocations remain valid.