In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 21

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $500 billion, equilibrium real GDP increases by $2,500 billion.Which of the following statements is true?

• A)The MPS = 0.8 where MPS = marginal propensity to save.
• B)The MPC = 0.2 where MPC = marginal propensity to consume.
• C)The MPS = 0.2.
• D)The MPC = 5.

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Definitions:

Anticipated Changes

Expected or predicted modifications or adjustments in a situation or environment.

Pending Layoffs

Refers to the anticipated termination of employment for employees, often due to economic downturns, restructuring, or organizational changes.

Asynchronous Messages

Communication where messages are sent and received at different times, allowing participants to engage according to their own schedules.

Instantaneous

Occurring or done in an instant or immediately; without any noticeable delay.