Suppose Aggregate Output Is Demand-Determined

question 27

Multiple Choice

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $20 billion,the marginal propensity to spend must be

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