The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 66

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc) = 0.75
• net tax rate (t) = 0.20
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars. FIGURE 22-2
Refer to Figure 22-2.What is the value of the multiplier in this economy?

• A)1.33
• B)1.67
• C)2.0
• D)2.5
• E)6.67

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Definitions:

Overload

A condition where the current flowing through an electrical circuit exceeds the designed capacity, potentially causing damage or failure.

Footprint

The critical contact interface between a tire and the road surface it contacts. Also used to describe the ground uplink/downlink geographic signal area of a satellite communications system; for instance, a truck can move through multiple communication footprints on a cross-continental trip.

Premature Wear

Excessive and early degradation of a component or system, occurring before expected wear out.

Rear Axle

The component of a vehicle that connects the rear wheels and supports the back end, often housing the differential in vehicles with rear-wheel drive.