In the Simple Keynesian Model with No Government and Foreign

question 60

Multiple Choice

In the simple Keynesian model with no government and foreign sectors, assume that the economy is in equilibrium at an output level of $2 billion with a marginal propensity to consume of 0.9. If investment spending decreases by $0.05 billion, what is the new equilibrium output level?

• A) $1.95 billion
• B) $2.5 billion
• C) $1.9 billion
• D) $1.5 billion

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Definitions:

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A legal principle that courts should follow previous judicial decisions when the same points arise again in litigation, ensuring legal consistency and predictability.

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