Suppose That the Government Allocates $2 Billion for New Roads

question 14

Multiple Choice

Suppose that the government allocates $2 billion for new roads. It also raises taxes by $2 billion to keep the deficit from growing. If the marginal propensity to consume = 0.8, what is the effect on equilibrium GDP?

• A)GDP does not change
• B)GDP increases by $5 billion
• C)GDP increases by $800 million
• D)GDP increases by $2 billion

Comprehend the factors affecting earnings per share and price/earnings ratio.

Recognize the impact of external factors on investment evaluation and company performance.

Discern the use of asset, liability, and equity ratios in evaluating company efficiency.

Understand the impact of transactions on financial ratios.

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Definitions:

Diaphysis

The shaft or central part of a long bone, typically cylindrical in shape and containing the marrow cavity.

Epiphyseal Lines

Remnants of the epiphyseal plate in long bones, signifying the end of bone growth in length.

Articular Cartilage

A soft, white substance that envelops the ends of bones at their joint intersections, minimizing friction and cushioning impacts.

Epiphysis

A region at the end of a long bone which is involved in the growth and development of the bone's length.