Figure 13-6 -Refer to Figure 13-6. Let Y = Real GDP, AE

question 83

Multiple Choice

Figure 13-6
-Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
I_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. What is the marginal propensity to consume?

• A) 0.25
• B) 0.5
• C) 1.0
• D) 2

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Definitions:

Perfectly Inelastic

A market condition where demand or supply does not change in response to price changes, represented by a vertical line on a graph.

Tax

A financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.

Tax Revenue

Money collected by governments through the imposition of taxes.

Widgets

A generic term often used to refer to any product, especially a hypothetical one used for economic or teaching purposes.