If the Marginal Propensity to Consume Is 0

question 292

Multiple Choice

If the marginal propensity to consume is 0.8 and there no income taxes or imports, the multiplier for a change in autonomous expenditure equals

• A) 4.0.
• B) 1.0
• C) 0.8.
• D) 5.0.

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Definitions:

Financial Engineering

The use of mathematical techniques to solve financial problems, including designing new financial products and strategies.

Securities

Securities that signify ownership stakes in companies (equities), lending agreements with governments or businesses (bonds), or entitlements to ownership through options.

Financial Processes

The methods and procedures used by a company to manage its financial activities, such as budgeting, accounting, and investment management.

Capital

Refers to the financial resources available for use in the production of goods or the provision of services.