If the Spending Multiplier Is 5,what Is the Marginal Propensity

question 138

Multiple Choice

If the spending multiplier is 5,what is the marginal propensity to consume in the economy?

• A) 0.4
• B) -0.8
• C) 0.5
• D) 0.75
• E) 0.8

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Definitions:

Consumer Surplus

The disjunction between the price consumers are prepared to shell out for a good or service and what they end up shelling out.

Deadweight Loss

An economic efficiency decrement occurs when there's a failure to achieve or inability to achieve an equilibrium for a particular good or service.

Market Distortion

An economic phenomenon where external factors lead to a deviation from the expected or efficient allocation of resources, often causing prices to be higher or lower than they would be in a free market.

Taxed

Subjected to a compulsory financial charge or levy by governmental organizations for the funding of state expenditures.