Suppose Aggregate Output Is Demand-Determined

question 88

Multiple Choice

Suppose aggregate output is demand-determined.If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending,then equilibrium income will ________ and the marginal propensity to spend must equal ________.

• A)decrease by $40 billion; 0.75
• B)decrease by $10 billion; 0.25
• C)increase by $40 billion; 0.25
• D)increase by $40 billion; 0.75
• E)increase by $10 billion; 4.0

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Definitions:

Competitive Bidding

A procurement process where multiple providers submit bids to win a contract, primarily based on price and quality.

Price Negotiations

The process of discussing and agreeing upon the prices of goods or services between sellers and buyers.

Personal Selling Process

A direct, one-on-one communication whereby a salesperson persuades a prospective buyer to purchase a product.

Prospecting

The search for potential customers or clients for a business's products or services.