Consider the Simplest Macro Model with Demand-Determined Output

question 23

Multiple Choice

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $30 million.The marginal propensity to spend in this economy is 0.9.What is the eventual total new expenditure in this economy due to the increase in investment?

• A)$3 million
• B)$30 million
• C)$27 million
• D)$270 million
• E)$300 million

---

Definitions:

Immigration Quotas

Laws or policies that limit the number of immigrants allowed to enter a country each year, often based on nationality, ethnicity, or other criteria.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, leading to widespread poverty, unemployment, and social upheaval.

The Crash

Refers to a significant economic decline, often used to describe the stock market crash of 1929 that precipitated the Great Depression.

Sacco-Vanzetti Case

A controversial legal case in the early 20th century in which Nicola Sacco and Bartolomeo Vanzetti, Italian-American anarchists, were convicted of murder and executed, sparking global protests.