Suppose That the Marginal Propensity to Consume (MPC)is

question 377

Multiple Choice

Suppose that the marginal propensity to consume (MPC) is .75 and there is an increase in investment spending of $100,000. As a result, equilibrium real Gross Domestic Product (GDP) would increase by

• A)$75,000.
• B)$100,000.
• C)$400,000.
• D)$750,000.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services provided on credit.

Financing Activities

Transactions and events that affect long-term liabilities and equity of an entity, reflected in the cash flow statement.

Treasury Stock

Represents shares that were previously issued but have been bought back by the company and are held in its treasury.

Dividends Paid

The portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.