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

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Definitions:

Layoff Cost

Expenses incurred by an organization when it temporarily or permanently terminates employment, typically including severance pay and benefits continuation.

Hiring And Training Cost

Expenses incurred in recruiting and equipping new employees with the necessary skills and knowledge for their roles.

Labor Hours

The total number of work hours contributed by employees for productive activities over a specified period.

Inventory Holding Cost

The total cost associated with keeping inventory in stock, including storage, insurance, taxes, depreciation, and opportunity costs.