Consider a Simple Macro Model with Demand-Determined Output

question 105

Multiple Choice

Consider a simple macro model with demand-determined output.Which of the following parameters will produce the largest fluctuations in real GDP from autonomous expenditure shocks?

• A)MPC = 0.8,t = 0.2,m = 0.3
• B)MPC = 0.7,t = 0.3,m = 0.2
• C)MPC = 0.7,t = 0.1,m = 0.4
• D)MPC = 0.9,t = 0.2,m = 0.4
• E)MPC = 0.8,t = 0.1,m = 0.2

---

Definitions:

Need for Rest

A physiological and psychological requirement for periods of rest or sleep to recover from activity and maintain health.

Social Motives

Social motives are driving forces behind individuals' behaviors that stem from the need for social interaction, acceptance, and belonging within a group or society.

Relationships

The connections, associations, or interactions between individuals or groups.

Inborn Predisposition

Natural tendencies or inclinations present at birth that influence behavior, preferences, or susceptibilities.