If Investment Decreases by $20 Billion and the MPC =

question 129

Multiple Choice

If investment decreases by $20 billion and the MPC = 0.8, the resulting decrease in the consumption component of AD is:

• A)​$16 billion.
• B)​$4 billion.
• C)​$100 billion.
• D)​$80 billion.

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Definitions:

Operating Costs

are expenses associated with the day-to-day functioning of a business, such as rent, utilities, and payroll.

Price of Eggs

The monetary cost required to purchase eggs, which can vary based on factors such as location, type of eggs, and market conditions.

Price Gouging

A situation where sellers increase the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair, often during a crisis.

Increase in Supply

A scenario where there is a growth in the availability of a product or service, often due to improvements in technology or increases in input resources.