In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 88

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to consume is 0.75?

• A) 1
• B) 4
• C) 5
• D) infinity

---

Definitions:

Pay Reduction

A decrease in the amount of money an employee is paid, often as a result of economic difficulties, performance issues, or restructuring within an organization.

Trend Analysis

The practice of collecting information and attempting to spot a pattern.

Leading Indicators

Objective measures that accurately predict future labor demand.

Transitional Matrices

Mathematical matrices that represent the probabilities of moving from one state to another in a dynamic system, often used in decision making and forecasting.