Consider the Simplest Macro Model with Demand-Determined Output

question 56

Multiple Choice

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million.The marginal propensity to spend in this economy is 0.75.What is the eventual total new expenditure in this economy due to the increase in investment?

• A)$75 million
• B)$100 million
• C)$25 million
• D)$500 million
• E)$400 million

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Definitions:

Lignin

A complex organic polymer found in the cell walls of many plants, making them rigid and woody and providing structural support.

Sclerenchyma

In plants, simple tissue composed of cells that die when mature; their tough walls structurally support plant parts. Includes fibers, sclereids.

Ground Tissue

A plant tissue system that makes up the bulk of most plants, involved in photosynthesis, storage, and support; includes parenchyma, collenchyma, and sclerenchyma cells.

Plant Body

The physical structure of a plant, including roots, stems, leaves, and reproductive structures, which function together in growth, reproduction, and survival.