In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 213

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $1,000 billion, equilibrium real GDP increases by $2,500 billion. Which of the following statements is true?

• A) The multiplier is 2.5.
• B) The MPC = 0.5.
• C) The MPC = 0.75.
• D) The MPC = 0.8.

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