As the Size of the MPC Decreases, the Value of the Balanced-Budget

question 174

Multiple Choice

As the size of the MPC decreases, the value of the balanced-budget multiplier

• A) increases.
• B) decreases.
• C) remains constant.
• D) could either increase or decrease.

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Definitions:

Raise Price

An action taken by a seller to increase the selling price of a product or service, often in response to higher costs or in an attempt to increase profits.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the excess that remains after a firm has paid all costs.

Pure Monopoly

A market structure where a single company is the sole producer of a particular good or service, facing no competition.

Pure Competitor

A firm or business operating in a market with many sellers offering identical products, meaning it has no control over market price.