Suppose That the Marginal Propensity to Consume Out of Disposable

question 18

Multiple Choice

Suppose that the marginal propensity to consume out of disposable income is 0.6 and the marginal propensity to import is 0.14.If the net tax rate is 0.1,then what is the marginal propensity to spend in this economy?

• A)0.30
• B)0.40
• C)0.46
• D)0.50
• E)0.60

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Definitions:

Sampling Distribution

The probability distribution of a statistic based on a large number of samples or replicates.

Probability Distribution

Describes how the probabilities are distributed over the values of a random variable.

Expected Value

The expected value of a variable, determined by summing up all possible values, each weighed by its probability of happening.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used to make inferences about the population.