If Policy Makers Want to Increase Real GDP by $100

question 328

Multiple Choice

If policy makers want to increase real GDP by $100 billion and the marginal propensity to consume is 0.75, they should _____ government purchases of goods and services by _____ .

• A)increase; $25 billion
• B)increase; $33 billion
• C)increase; $100 billion
• D)decrease; $100 billion

Analyze the effects of inflation on accounting depreciation and real economic income.

Recognize the importance of restating financial statements to a common accounting basis for comparison.

Calculate and interpret firm-specific ratios such as leverage, quick ratio, asset turnover, and inventory turnover.

Understand the concept and implications of globalization in economic, cultural, political, and technological contexts.

---

Definitions:

Shipping Costs

The expenses involved in transporting goods from one location to another, including freight charges, packaging, and handling fees.

Diseconomies of Scale

An economic concept where an increase in production leads to a rise in average costs per unit due to inefficiencies.

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to lower average costs per unit due to spread fixed costs and operational efficiencies.

Cycle Inventory

The portion of inventory that a company rotates in and out of stock as part of its normal business operations, reflecting the frequency of production and ordering cycles.