If the MPC = 0

question 5

Multiple Choice

If the MPC = 0.6 and government purchases increase by $2 trillion,then equilibrium real GDP demanded

• A)increases by $5 trillion
• B)decreases by the government multiplier
• C)increases by $2 trillion
• D)decreases by $5 trillion
• E)is indeterminate

---

Definitions:

Unemployment

The condition of being without a job, despite actively seeking work, often measured as a percentage of the labor force.

Income Inequality

Income Inequality describes the extent to which income is distributed unevenly among a population.

China

The world's most populous country, located in East Asia, known for its rich history, significant economic power, and rapid modernization and development in recent decades.

Increasing

A process or trend characterized by a growth or rise in quantity, size, or intensity.