Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will
1 answer:
Answer:
$50 billion
Explanation:
The net effect on aggregate demand of the additional investment spending will be derived by multiplying the increased spending by the Multiplier.
Where MPC is the marginal propensity to consumer, and
MPS, the marginal propensity to save.
Therefore the multiplier = = 2.5
Accordingly, the increase in aggregate demand as a result of the increase in the investment
= 2.5 * $20 billion
= $50 billion
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Answer:
The amount of the net income shown on the income statement is $9,000
Explanation:
The computation of the net income is shown below:
Net income = Services provided for cash = operating expenses incurred
= $45,000 - $36,000
= $9,000
According to the matching principle, the revenues of a particular period should always be matched with the expenses that are incurred in that particular year
So, the net income that is to be reported on the income statement is $9,000
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