If the marginal propensity to consume (MPC) is 0.75, the value of the spending multiplier is:
a. 0.
b. 1.
c. 4.
d. 5.
c
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Changes in which of the following do NOT affect the natural unemployment rate?
A) the quantity of money B) the minimum wage C) unemployment benefits D) structural change E) the birth rate or other demographic data
If borrowers with the most risky investment projects seek bank loans in higher proportion to those borrowers with the safest investment projects, banks are said to face the problem of
A) adverse credit risk. B) adverse selection. C) moral hazard. D) lemon lenders.
If monetary policy is used to control GDP, there is greater sacrifice of long-run economic growth in pursuing short-run stabilization the ________ is fiscal policy and thus the ________ is the real interest rate
A) tighter, higher B) tighter, lower C) easier, higher D) easier, lower
The goal of expansionary fiscal policy is to:
A. increase the money supply. B. cool off the economy. C. reduce interest rates. D. stimulate the economy.