Suppose Lower Expectations Lead to a Decrease of $240 in Desired

question 46

Multiple Choice

Suppose lower expectations lead to a decrease of $240 in desired investment in the economy and the marginal propensity to consume is 0.75. Table 10.2
$\begin{array}{c}\begin{array}{|l|}\hline\\ \text {Spending Cycles}\\\hline \text {First-cycle}\\\text {spending}\\\hline \text {Second-cycle}\\\text {spending}\\\hline \text {Third-cycle}\\\text {spending}\\\hline \end{array}\begin{array}{c|}\hline \text {Change in this Cycle's Spending}\\\text { and Income}\\\hline\\\quad\quad\quad\quad\quad\quad\quad\quad -\$ 240 \\\hline\\\\\hline\\\\\hline\end{array}\begin{array}{c|}\hline \text {Cumulative Decrease in }\\ \text {Spending and Income}\\\hline\\\quad\quad\quad\quad\quad\quad\quad\quad -\$240\\\hline\\\\\hline\\\\\hline\end{array}\end{array}$


In Table 10.2,what is the change in the third cycle of spending resulting from the initial drop in investment?

• A)-$135.00.
• B)-$180.00.
• C)-$420.00.
• D)-$555.00.

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Definitions:

Dynamic Environment

A constantly changing and evolving setting in which an organization operates, often characterized by unpredictable and rapid changes.

Financial Performance

The measure of an organization's profitability, revenue, expenses, and overall financial health.

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A leadership approach that creates significant change in the life of people and organizations by elevating the interests of others above the leader’s own.

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