When an Economy Is Operating Well Below Its Full-Employment Capacity

question 5

Multiple Choice

When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 3/4, a $10 billion increase in investment will cause the equilibrium income to rise by

• A) $5 billion.
• B) $10 billion.
• C) $20 billion.
• D) $40 billion.

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Definitions:

Minority Angel Funding

Investments made by angel investors who are part of a minority group, or investments made in startups led by individuals from minority groups.

Women Angel Groups

Investment collectives comprised solely or predominantly of women, focusing on providing capital to start-up companies led by female entrepreneurs.

Venture Capital

Financing that investors provide to startup companies and small businesses with long-term growth potential.

Accredited Investors

Investors who earn an annual income of more than $200,000 or have a net worth of more than $1 million.