Assume That the MPC Is 0

question 94

Multiple Choice

Assume that the MPC is 0.75. If government spending increases by $400, equilibrium output ________; and if taxes increase by $400, equilibrium output ________.

• A) increases by $1,600; decreases by $1,600
• B) increases by $1,600; decreases by $1,200
• C) increases by $1,200; decreases by $1,600
• D) increases by $400; decreases by $400

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Definitions:

Graduated

Having completed a course of study and received a diploma or degree from an educational institution.

Alternative Hypothesis

A statement in statistics that indicates something is true, different from the null hypothesis, usually suggesting a new effect or phenomenon.

University

An institution of higher education and research, which awards academic degrees in various academic disciplines.

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A facility dedicated to helping individuals achieve and maintain a healthy weight through diet, exercise, and other lifestyle changes.