Consider a Simple Macro Model with Demand-Determined Output

question 46

Multiple Choice

Consider a simple macro model with demand-determined output.In such a model,the larger the marginal propensity to spend,the

• A)larger the MPC.
• B)smaller the MPS.
• C)smaller the simple multiplier.
• D)larger the simple multiplier.
• E)greater is investment.

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Definitions:

Movement

Refers to a change in position, location, or state of an object or concept over time.

Substitute Goods

These are goods that can be used in place of one another, such that the increase in price of one leads to an increase in demand for the other.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price.

Demand

The desire and willingness of consumers to purchase goods or services at a given price level.