-Suppose Lower Interest Rates Suddenly Lead to an Injection of $325

question 41

Multiple Choice

-Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Complete Table 10.1 by calculating the spending cycles as the increased investment spending works its way through the economy. In Table 10.1,what will be the total increase in aggregate demand resulting from the initial $325 increase in investment expenditure after an infinite number of cycles?

• A)$1,040.
• B)$1,625.
• C)$3,965.
• D)$325.

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Definitions:

Solar Energy

Energy from the sun that is converted into thermal or electrical energy.

Kilocalories

A unit of energy equal to 1,000 calories, commonly used to express the energy content of food.

Trophic Level

Feeding level of one or more populations in a food web.

Detritivores

Organisms that feed on dead organic material, particularly plant detritus, playing a crucial role in nutrient recycling.