Suppose the Price Level Is Constant,output Is Demand-Determined,and the Economy

question 89

Multiple Choice

Suppose the price level is constant,output is demand-determined,and the economy is closed with no government.If the marginal propensity to spend is 0.7,the simple multiplier is

• A)0.33.
• B)0.70.
• C)1.00.
• D)1.42.
• E)3.33.

---

Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

White Knight

A corporation or individual that acquires a corporation on the verge of being taken over by forces deemed undesirable by the company's board or management.

Hostile Takeover

An acquisition attempt by a company or investor to acquire another company against the wishes of the target company's management and board of directors.

Joint Venture

Typically, an agreement between firms to create a separate, co-owned entity established to pursue a joint goal.