If Initial Equilibrium Real Gross Domestic Product (GDP) Is $500

question 55

Multiple Choice

If initial equilibrium real Gross Domestic Product (GDP) is $500 billion, MPC = 0.9, and autonomous investment increases $40 billion, equilibrium real Gross Domestic Product (GDP) will be

• A) $540 billion.
• B) $600 billion.
• C) $800 billion.
• D) $900 billion.

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Definitions:

Mixed Cost

A cost composed of a fixed component and a variable component that changes with the level of activity or production.

High-low Method

An approach used in cost accounting to determine the variable and fixed components of a cost by analyzing the highest and lowest levels of activity.

Utility Cost

The expense incurred for using utilities such as electricity, water, and natural gas in a business operation.

Total Cost

The sum of all costs associated with the production and delivery of a company's products or services, including both fixed and variable costs.