Assume That a $1

question 33

Multiple Choice

Assume that a $1.00 increase in exports increases GDP by $3.00, and a $1.00 increase in income increases import spending by $0.15. In this case, a $1,000 million increase in exports will increase net exports by

• A) $550 million.
• B) $700 million.
• C) $1,000 million.
• D) $1,350 million.

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Definitions:

Average Variable Cost

The total variable costs divided by the quantity of output produced; it fluctuates with changes in output.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a good or service.

Average Variable Cost

The per-unit variable cost, found by dividing the total variable expenses by the amount of output generated.

Marginal Cost

The cost of producing one additional unit of a good or service, which is used in decision-making about output levels.