If banks decide to hold excess reserves, the multiple expansion of bank deposits will be limited.

In the context of the neoclassical growth model, which of the following does NOT explain the growth rates of countries which are initially poor?

A) nations which are below their steady-state growth paths will grow more slowly until they reach the steady state B) the rate of return is higher in poor countries C) capital flows from rich countries to poor countries D) the passage of time allows poor countries to adopt the productive techniques of rich countries.

Suppose a consumption function is given as C = $175 + 0.85YD. The marginal propensity to save is

A. -0.15. B. 0.15. C. 0.85. D. 200.