Consider the Simplest Macro Model with a Constant Price Level

question 12

Multiple Choice

Consider the simplest macro model with a constant price level and demand-determined output.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $12 billion,the marginal propensity to spend must be

• A)1/3.
• B)1/2.
• C)2/3.
• D)4/5.
• E)3.

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