Suppose That MPC = 0

question 103

Multiple Choice

Suppose that MPC = 0.8 and MPI = 0. According to the Keynesian multiplier, an increase of $20 million in government purchases will

• A)increase real GDP by $16 million.
• B)decrease real GDP by $16 million.
• C)increase real GDP by $100 million.
• D)decrease real GDP by $100 million.
• E)have no impact on real GDP.

---

Definitions:

Contract

An agreement between two or more parties that is binding by law and comes with mutual responsibilities.

Courts

are judicial institutions with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters.

Covenant Not To Compete

An agreement, often in an employment contract, where one party agrees not to enter into or start a similar profession or trade in competition against another party.

Employment

A formal relationship between an employer and an employee where the employee performs work under certain conditions in exchange for remuneration.