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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Definitions:

Human Thoughts

The mental processes and cognitive activities associated with thinking, reasoning, and understanding.

Motivation

Refers to the factors or stimuli that encourage individuals to pursue and achieve their goals with enthusiasm and persistence.

Theoretical Foundation

The fundamental principles and assumptions that form the basis for a particular theory or field of study.

ERG Theory

A theory proposed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth, modifying Maslow's hierarchy of needs.