Assume That There Is a $20 Billion Increase in Government

question 14

Multiple Choice

Assume that there is a $20 billion increase in government purchases.If MPC = 0.8, the sum of the indirect effect on aggregate demand through induced additional consumption purchases is equal to:

• A)$50 billion.
• B)$10 billion.
• C)$40 billion.
• D)$20 billion.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply.

Demand For Land

The desire, backed by purchasing power, for the use or ownership of land, which is influenced by various economic and societal factors.

Efficient Use Of Resources

The optimal allocation and utilization of resources to maximize productivity and minimize waste.

Input Price

Input Price refers to the cost of resources used in the production of goods or services, including materials, labor, and overhead, which can affect production costs and pricing strategies.