Suppose That a Keynesian Import Function Is Expressed as M

question 20

Multiple Choice

Suppose that a Keynesian import function is expressed as M = 20 + 0.25Y. With this Function,

• A) if income = 1,000, imports = 250.
• B) if income = 1,000, the average propensity to import is 0.27.
• C) the marginal propensity to import is greater at an income level of 1,000 than at an income level of 800.
• D) the average propensity to import is greater at an income level of 1,000 than at an income level of 800.

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Definitions:

Net Cash Flow

The variance between the cash coming into and going out of a business within a set timeframe.

Compound Interest

The calculation of interest on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return, reflecting the time value of money.

Earnings Rate

The rate at which an investment or savings account generates income over a specific period of time.