Consider a Simple Macro Model with a Constant Price Level

question 50

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The value of the simple multiplier in this model is

• A)0.37.
• B)1.59.
• C)2.04.
• D)2.32.
• E)2.70.

---

Definitions:

Common European Currency

The euro (€) is the currency adopted by many European Union countries, facilitating economic transactions across member states.

Lower Inflation Rates

Lower inflation rates refer to a situation where there is a slow rate of increase in the general level of prices for goods and services, which can indicate a stable economic environment.

Foreign Subsidiary

A local operation completely owned by a foreign firm.

Local Firm

A business establishment that operates in a specific geographical area and typically serves the needs of a local community.