If the Marginal Propensity to Consume Is 0

question 134

Multiple Choice

If the marginal propensity to consume is 0.9 in a private closed economy, a $20 billion decline in investment spending will decrease

• A)GDP by $20 billion.
• B)GDP by $100 billion.
• C)saving by $20 billion.
• D)consumption by $200 billion.

---

Definitions:

Fundamental Attribution Error

The tendency to overemphasize personality traits and underestimate situational factors when explaining others' behaviors.

Actor-observer Bias

The tendency to attribute one's own actions to external factors while attributing others' actions to their internal characteristics.

Situational Influences

External factors present in an individual's environment that impact behavior, decisions, and perceptions.

Situational Factors

Refers to external influences that affect an individual's behavior, decision-making, and ability to perform in various situations.