If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditure by $1.2 trillion. If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion.
A) 0.6; 0.8
B) 1.67; 2.25
C) 1.2; 1.6
D) 6.0; 8.0
E) None of the above because a $2 trillion increase in disposable income always leads to a $2 trillion increase in consumption expenditure.
A
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According to Tobin's q theory, ________ policy can affect ________ spending through its effect on the prices of common stock
A) fiscal; consumption B) fiscal; investment C) monetary; consumption D) monetary; investment
Arguments made against free trade include all of the following except
A) national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. B) infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. C) dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. D) free trade is inflationary and should be restricted in the domestic interest. E) if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against.