Consider a Simple Macro Model with a Constant Price Level

question 21

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend in such a model is 0.6,the simple multiplier is

• A)0.
• B)0.6.
• C)1.67.
• D)2.5.
• E)6.0.

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Definitions:

Purchasing Costs

The costs associated directly with buying goods or services, including price of the product, taxes, shipping, and handling fees.

Raw Materials

The basic materials from which products are made, typically extracted from natural resources or semi-processed before manufacturing begins.

Finished Goods

These are products that have completed the manufacturing process and are ready for sale to consumers or retailers.

Closed-Loop

A system where the resources are reused, recycled, or adequately disposed of to minimize waste and environmental impact.