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scoray [572]
3 years ago
13

Compared to a country with an MPC of 0.8, a country with an MPC of 0.6 would have to change government expenditures by _________

as much to have the same impact on real GDP.
a. twice.
b. three times.
c. four times.
d. five times.
Business
1 answer:
Afina-wow [57]3 years ago
4 0

Answer: a. twice

Explanation:

The impact that government spending will have on GDP is shown by the Multiplier.

Formula is:

= 1 / (1 - MPC)

For the country with an MPC of 0.8:

= 1 / (1 - 0.8)

= 5

For country with MPC of 0.6:

= 1 / (1 - 0.6)

= 2.5

For government spending to be the same, both countries would need a multiple of 5. The only way the second country can get there is by multiplying their MPC by:

= 5 / 2.5

= 2 times

Answer is therefore twice.

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Read 2 more answers
Please calculate the Net Present Value for the following scenario:
Mrac [35]

Answer:

-$931.35

Explanation:

The computation of the net present value is given below:

Before that the present value is

<u>Year    Amount        Discount factor at 14%      Present value </u>

1           $300                   .877                                  $263.1

2          $350                    .769                                 $269.15

3          $400                    .675                                 $270

4          $450                    .592                                 $266.4

PV of Cash Inflows = $1,068.65

And, the initial investment is $2,000

So, the net present value is

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5 0
3 years ago
Price Company assigns overhead based on machine hours. The Milling Department logs 2,400 machine hours and Cutting Department sh
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Since the manufacturing overhead expense is allocated to the asset produced, the expense is credited. Once the product is sold, the expense will become part of the cost of goods sold and they will be debited.

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