If the Marginal Propensity to Consume Is 0

question 58

Multiple Choice

If the marginal propensity to consume is 0.8, the value of the multiplier is:

• A) 0.8.
• B) 5.
• C) 1.25.
• D) 2.

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Definitions:

Labor Hours

A measure of the amount of work effort, in hours, performed by employees within a specific time period.

Normative View

An opinion or viewpoint based on what is considered to be ideal or how things should be rather than on empirical evidence.

Federal Minimum Wage

The lowest legal hourly wage that employers can pay their workers, as mandated by federal law.

Opportunity Cost

When deciding, the toll of not considering the next most beneficial alternative.