Consider a Simple Macro Model with Demand- Determined Output

question 27

Multiple Choice

Consider a simple macro model with demand- determined output. Which of the following parameters will produce the largest fluctuations in real GDP from autonomous expenditure shocks?

• A)MPC = 0.7, t = 0.1, m = 0.4
• B)MPC = 0.8, t = 0.2, m = 0.3
• C)MPC = 0.8, t = 0.1, m = 0.2
• D)MPC = 0.7, t = 0.3, m = 0.2
• E)MPC = 0.9, t = 0.2, m = 0.4