If the marginal propensity to save (MPS) increased from 0.3 to 0.4, this would cause the multiplier effect to
A. increase.
B. decrease.
C. stay the same.
D. None of these is correct.
Answer: B
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A decrease in the discount rate
A) reduces the cost of borrowing from the Fed. B) increases the cost of reserves borrowed from the Fed. C) signals the Fed's desire to decrease the money supply. D) signals the Fed's desire to reduce lending to commercial banks.
Suppose Gerald works for Lola as a production assistant. Gerald and Lola fall in love, get married and have children. Gerald stops working for Lola in order to care for the children. What will be the effect of this scenario on GDP?
A) GDP will increase. B) GDP will decrease. C) GDP will not change. D) GDP may increase or decrease depending on the rate of inflation.
List three key reasons to study economics
What will be an ideal response?
Which of the following will result in a decrease in a consumer's purchasing power?
A) A decrease in the consumer's income B) An increase in the price of the good on the vertical axis C) An increase in the price of the good on the horizontal axis D) all of the above