If the marginal propensity to consume (MPC) is 0.80, the value of the spending multiplier is:
a. 2.
b. 5.
c. 8.
d. 10.
b
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An appreciation of the U.S. dollar occurs when
A) the international price of the dollar falls. B) the international price of the dollar rises. C) the supply of dollars in international markets increases. D) the U.S. demand for foreign currencies increases.
Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium
What will be an ideal response?
The opportunity cost of capital investment is the:
A. real interest rate. B. value of the marginal product of capital. C. price of new capital goods. D. value of the marginal product of labor.
Which of the following is not a tool the Fed uses to manage the money supply?
A) open market operations B) setting the discount rate C) expanding and contracting deposit insurance D) setting reserve requirements for deposits in the banking system