What Is the Value of the Spending Multiplier When MPC

question 134

Multiple Choice

What is the value of the spending multiplier when MPC = 0.85 and MPI = 0.3?

• A)1.82
• B)0.85
• C)2.22
• D)1.18
• E)2.50

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Definitions:

Normal balance

The side of an account (debit or credit) where increases in the account are recorded, depending on the account type.

Inventory balance

The total value of all goods and materials held by a company intended for sale or production.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Operating Expenses

Operating expenses are the costs associated with running a business's day-to-day operations, excluding the cost of goods sold.