Suppose Aggregate Output Is Demand-Determined

question 27

Multiple Choice

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $20 billion,the marginal propensity to spend must be

• A)2/5.
• B)1/3.
• C)1/2.
• D)4/5.
• E)5.

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Definitions:

Securities

Financial instruments that represent ownership positions in corporations (stock), creditor relationships with governmental bodies or corporations (bonds), or rights to ownership as represented by an option.

Subscriptions Receivable

An amount owed by customers for subscription services or products that have been provided but not yet paid for.

Paid-in Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock, reflecting the capital that has been invested in the company beyond its par value.

Common Stock Subscribed

A commitment by investors to purchase shares of a company's common stock, where the shares are reserved for the subscribers until payment is made.