In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 88

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to consume is 0.75?

• A) 1
• B) 4
• C) 5
• D) infinity

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Definitions:

Fee Simple Absolute

The most extensive form of property ownership, granting the holder complete control over the property, with the right to use, lease, or sell.

Fair Market Value

The price that a willing and informed buyer would pay to a willing and informed seller when neither is under duress to buy or sell.

Public Purpose

Justification for government action or policy that is intended to benefit the public at large or improve public welfare.

Earnest Money

A deposit made to a seller representing a buyer's good faith to enter and proceed with a transaction, typically in real estate deals.