Consider a Simple Macro Model with a Constant Price Level

question 110

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 0.8,the simple multiplier is

• A)0.
• B)0.8.
• C)1.25.
• D)5.0.
• E)8.0.

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Definitions:

Days' Sales in Inventory

A measure of how quickly inventory is sold and replaced over a period, calculated by dividing the ending inventory by the cost of goods sold and multiplying by 365.

Year 2

Typically refers to the second year in a given time frame or study period, often used in financial analysis, forecasts, or planning scenarios.

Ending Inventory Balance

The value or quantity of goods available for sale or use at the end of an accounting period, after accounting for purchases and sales during the period.

Income Statement

An income statement is a financial statement that shows a company's revenues and expenses over a specific period, resulting in a net income or loss.