Question

Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is $200 billion. If the MPC is 0.8, then what is the distance between N and L or by how much did government

spending change?
A) $16 billion
B) $40 billion
C) $200 billion
D) $1,000 billion

Answer 1

`\$40` billion is the distance between N and L.

Option - B

Explanation:

In financial aspects, the minimal penchant to expend (MPC) is a metric that measures actuated utilization, the idea that the expansion in close to home shopper spending (utilization) happens with an increment in discretionary cash flow (pay after expenses and moves). Government going through alludes to cash spent by the open area on the procurement of merchandise and arrangement of administrations, for example, training, medicinal services, social security, and guard.

In national pay bookkeeping, when the administration gets products and ventures for current use to straightforwardly fulfill the individual or aggregate needs and necessities of the network, it is named government last utilization spending.

At the point when the administration procures products and enterprises for sometime later, it is named government speculation. This incorporates open utilization and open venture, and move installments comprising of salary moves.