Consider the Simple Macro with Demand-Determined Output

question 92

Multiple Choice

Consider the simple macro with demand-determined output.If the marginal propensity to consume out of disposable income (MPC) is equal to the marginal propensity to spend out of national income (z) ,then

• A)the marginal propensity to import (m)is larger than the tax rate (t).
• B)the marginal propensity to import (m)is smaller than the tax rate (t).
• C)the simple multiplier is smaller in a closed economy with no government.
• D)the simple multiplier is larger in a closed economy with no government.
• E)there is no effect on the simple multiplier from imports or tax rates.

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