Consider a Simple Macro Model with Demand- Determined Output

question 19

Multiple Choice

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

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

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Definitions:

Withdrawals

Money or other assets taken out from a business by its owner(s) for personal use.

Accounts Receivable

The financial claim a company holds against its customers for sales made on credit, indicating future cash inflows.

Account

A record summarizing all the transactions pertaining to a specific item in the financial statements.

Expenses Paid

Refers to the outflow of cash or other valuable assets from a person or company to another entity in exchange for goods or services.