Consider Two Economies,A and B

question 79

Multiple Choice

Consider two economies,A and B.Economy A has a marginal propensity to consume of 0.9,a net tax rate of 0.2 and a marginal propensity to import of 0.2.Economy B has a marginal propensity to consume of 0.7,a net tax rate of 0.2 and a marginal propensity to import of 0.2.Suppose there is an increase in autonomous investment of $5 billion in each of these economies.Which of the following statements is true?

• A)The AD curve shifts farther to the left in Economy B than Economy A.
• B)The AD curve shifts farther to the right in Economy A than Economy B.
• C)The AD curve shifts to the left the same amount in both economies.
• D)The AD curve shifts to the right the same amount in both economies.
• E)The simple multiplier is larger in Economy A.

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Definitions:

Larynx And Epiglottis

The larynx is an organ involved in breathing, producing sound, and protecting the trachea, while the epiglottis is a flap of tissue that prevents food from entering the airways.

Pharynx

The pharynx is a muscular tube in the upper part of the throat that connects the mouth and nasal passages with the esophagus and larynx, serving as a pathway for air and food.

American Sign Language

A complete, natural language that employs signs made by moving the hands combined with facial expressions and postures of the body to communicate.

Neandertals

A distinct group within the genus Homo inhabiting Europe and Southwest Asia from approximately 30,000 to 125,000 years ago.