If Net Exports Increase by $10 Billion and the MPC

question 80

Multiple Choice

If net exports increase by $10 billion and the MPC = 0.6, the resulting increase in the consumption component of AD is:

• A)​$25 billion.
• B)​$15 billion.
• C)​$6 billion.
• D)​$4 billion.

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Definitions:

Irrational

A type of number that cannot be expressed as a simple fraction, including numbers like \(\pi\) and \(\sqrt{2}\).

Rational

Pertaining to a number or expression that can be expressed as the quotient or ratio of two integers.

Square Root

The number that produces a specified quantity when multiplied by itself (e.g., the square root of 9 is 3).

Exponents

A mathematical notation indicating the number of times a quantity is multiplied by itself.