The sum of MPC and the MPS must equal 1 because
What will be an ideal response?
all additional income must be spent or saved
You might also like to view...
Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?
A) $2 B) $1 C) $3 D) unable to determine
Ceteris paribus, if a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to _____
a. 2 b. 20 c. 10 d. 0.5 e. 0.2
The circular flow model primarily studies how decisions are made by what two groups?
a. consumers and suppliers b. households and firms c. government and households d. government and firms
Explain in detail what effect an increase in government spending will have on: (1 ) the LM curve; and (2 ) the IS curve
What will be an ideal response?