If Autonomous Investment Increases by $200 Billion and the Marginal

question 286

Multiple Choice

If autonomous investment increases by $200 billion and the marginal propensity to consume (MPC) is 0.5, then

• A)real Gross Domestic Product (GDP)will rise by $400 billion.
• B)real Gross Domestic Product (GDP)will rise by $200 billion.
• C)real Gross Domestic Product (GDP)will rise by $100 billion.
• D)real Gross Domestic Product (GDP)will decrease by $100 billion.

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Definitions:

Equivalent Units

A concept used in cost accounting to express the amount of work done on incomplete units in terms of fully completed units.

Finished Goods Inventory

Manufactured products that are complete and ready for sale.

Cost Of Goods Sold

The total direct costs attributable to the production of the goods sold in a company, including materials and labor.

Physical Units

A measure of quantity in production or inventory, typically referred to when counting tangible products or items.