What concept does the following formula express?
a. autonomous change in consumption spending
b. marginal propensity to consume
c. marginal propensity to save
d. equilibrium in the aggregate expenditure model
c. marginal propensity to save
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
If equilibrium income is $500 billion, MPC = 0.8, MPI = 0.2 and autonomous government spending increases by $20 billion, the new equilibrium income will be _____
a. $600 billion b. $550 billion c. $525 billion d. $520 billion e. $500 billion
Aggregate demand is the sum of
a. C + I + G + (X ? IM). b. C + I + X. c. C + I + X ? IM. d. C + I + G.
Movements of workers from country to country can cause shifts in the labor supply curves for both countries
a. True b. False Indicate whether the statement is true or false