If the Marginal Propensity to Consume (MPC) Is 0

question 8

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75 and government purchases increase by $100 billion, then

• A) equilibrium real Gross Domestic Product (GDP) will increase by $400 billion.
• B) equilibrium real Gross Domestic Product (GDP) will increase by $200 billion.
• C) equilibrium real Gross Domestic Product (GDP) will increase by $40 billion.
• D) the effect on equilibrium real Gross Domestic Product (GDP) cannot be determined from the given information.

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Definitions:

Energy Flow

Energy flow describes the movement of energy through an ecosystem, from primary producers through various consumers, and ultimately to decomposers.

Ecosystem

An ecological community comprising both living organisms and their physical surroundings that interact with each other.

Physical Environment

refers to all the physical and abiotic factors that surround and affect the survival and development of organisms, such as water, air, temperature, and geography.

Ecosystem

A community of living organisms in conjunction with the non-living components of their environment, interacting as a system.