Suppose the Price Level Is Constant, Output Is Demand- Determined

question 97

Multiple Choice

Suppose the price level is constant, output is demand- determined, and the economy is closed with no government. If the saving function is S = - 100 + (0.4) Y, the simple multiplier is

• A)0.2.
• B)1.
• C)2.5.
• D)5.
• E)- insufficient information to know.

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Definitions:

State Interference

State interference involves actions by a state government that affect or hinder federal policies, operations, or laws.

Amendment

A formal change or addition proposed or made to a document, law, or legislative bill.

Federal Funds

Reserve balances that commercial banks hold at Federal Reserve Banks, often referred to in the context of the federal funds rate, which is the interest rate at which banks lend to each other overnight.

Income Tax

Tax levied by a government directly on income, including wages, salaries, and investments.