An increase in spending of $25 billion increases real GDP from $600 billion to $700 billion. The marginal propensity to consume must be:
A. 0.25 and the multiplier is 4
B. 0.50 and the multiplier is 2
C. 0.75 and the multiplier is 4
D. 0.80 and the multiplier is 5
C. 0.75 and the multiplier is 4
Economics
You might also like to view...
Describe the elasticity of supply for college education. What effect does this have on price and quantity as demand for college increases?
Please provide the best answer for the statement.
Economics
What are the Euler Equations?
A. another name for the objective function B. another game for the first order conditions, defining optimal choices C. equations relating the optimal choice of interest rates to other prices D. both A and B, but not C
Economics