If the MPC Is 2/3 Then the Multiplier Is

question 379

Multiple Choice

If the MPC is 2/3 then the multiplier is

• A)3/2, so a $100 increase in government spending increases aggregate demand by $150.
• B)3/2, so a $100 increase in government spending increases aggregate supply by $150.
• C)3, so a $100 increase in government spending increases aggregate demand by $300.
• D)3, so a $100 increase in government spending increases aggregate supply by $300.

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Definitions:

Activity Cost

The financial sum associated with carrying out a specific business task or operation, usually involved in budgeting and accounting.

Activity-based Costing System

An accounting method that assigns costs to products and services based on the activities and resources that go into creating them, providing more precise costing information.

Making Patterns

The process of creating templates or models to be used in manufacturing or craft projects, ensuring consistency and precision in production.

Product Diversity

Refers to the range of different products or services offered by a company, indicating the variety in a company's offerings.