If the marginal propensity to consume (MPC) is 0.60, what is the spending multiplier?
a. 0.4.
b. 0.6.
c. 2.5.
d. 6.0.
c
You might also like to view...
A change in the price of a good has two effects on the quantity consumed. What are these effects?
A) the income effect and the substitution effect B) the consumption effect and expenditure effect C) the total utility effect and marginal utility effect D) the utility effect and the budget effect
In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion
If autonomous monetary policy (alone) is used to bring output to $12 trillion, then the figure implies that the real interest rate will be ________ percent, and the inflation rate will be one percent. A) 1.5 B) zero C) one D) 0.5 E) 2.5
An increase in real interest rates will increase aggregate demand.
Answer the following statement true (T) or false (F)
The rate of unemployment when the economy is at its potential output is called the:
A. Full-employment rate of unemployment B. Natural rate of unemployment C. Structural rate of unemployment D. Frictional rate of unemployment