If the Marginal Propensity to Import Is 0

question 234

Multiple Choice

If the marginal propensity to import is 0.2, then a $1,000 decrease in income will:

• A) decrease net exports by 2000.
• B) increase net exports by 200.
• C) increase net exports by 1000.
• D) decrease net exports by 200.

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Definitions:

Index Model

A statistical approach for measuring the influence of various economic and financial factors on the returns of a stock or portfolio, often used for risk management.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Stock A

A generic term used to represent a share in the ownership of a company, typically entitling the shareholder to a portion of the profits.

Mean-Variance Efficient Portfolio

A portfolio constructed to have the highest possible expected return for a given level of risk.