If the MPC = 0

question 118

Multiple Choice

If the MPC = 0.75,then the government purchases multiplier is about

• A)1.33.
• B)7.
• C)4.
• D)3.

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Definitions:

Working Capital

The gap between a firm's current assets and its current liabilities, signifying the available liquidity for operating its business activities.

Incremental Sales

The additional revenue generated from an increase in sales activities or volume above a baseline level.

Cash Operating Expenses

Expenses that a company pays out in cash during an accounting period, excluding non-cash expenses like depreciation.

After-Tax Discount

The reduced value of a cash flow or series of cash flows after accounting for the impact of income tax.