If the Marginal Propensity to Consume (MPC) Is 0

question 13

Multiple Choice

If the marginal propensity to consume (MPC) is 0.8 and the parliament votes for a $100 million tax cut. What is the change in aggregate demand?

• A) $250 million.
• B) $200 million.
• C) $100 million.
• D) $80 million.

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Definitions:

Inventory System

A method or software used by organizations to track inventory levels, orders, sales, and deliveries.

Physical Inventory

A process where a business counts its entire inventory by hand at a specific point in time to verify stock quantities.

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Specific Identification

Specific identification is an inventory valuation method that tracks the cost of individual items in inventory and matches those costs with the items' actual sale.