Consider a Simple Macro Model with Demand- Determined Output

question 70

Multiple Choice

Consider a simple macro model with demand- determined output. In such a model, the smaller the marginal propensity to spend, the

• A)smaller the MPS.
• B)larger is investment.
• C)larger the MPC.
• D)smaller the simple multiplier.
• E)larger the simple multiplier.

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Definitions:

Market Power

The ability of a company or group of companies to manipulate or control prices and total market output.

Oligopolistic

Pertaining to a market structure characterized by a small number of firms whose actions and policies can significantly impact the entire market.

Perfect Competition

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and full information.

Monopolistic Competition

A market structure marked by many competing firms offering products or services that are similar, but not perfect substitutes.