Suppose Aggregate Output Is Demand- Determined

question 42

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 $12 billion, the marginal propensity to spend must be

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

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Definitions:

Sport Utility Vehicles

Large vehicles combining the features of passenger cars with off-road capabilities and increased cargo space.

Gasoline Consumption

The total volume of gasoline used by vehicles or industries within a specific period.

Market Equilibrium

A market state where the supply of goods matches demand, with stable prices and quantities.