In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 88

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to consume is 0.75?

• A) 1
• B) 4
• C) 5
• D) infinity

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Definitions:

Sherman Act Section 1

A provision of U.S. antitrust law that prohibits contracts, combinations, or conspiracies that restrain interstate or foreign trade.

Violation

The act of disregarding or breaking a law, agreement, or rule, resulting in possible legal penalties or consequences.

Manufacturer

A person or company that makes goods for sale, especially on a large scale through the use of machines.

National Cooperative Research Act

U.S. legislation that encourages collaborative research and development among businesses by providing certain antitrust protections.