In the Simple Aggregate Expenditure Model Where All Components of Aggregate

question 103

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 $1,000 billion, equilibrium real GDP increases by $2,500 billion.Which of the following statements is true?

• A)The multiplier is 2.5.
• B)The MPC = 0.5 where MPC = marginal propensity to consume.
• C)The MPC = 0.75.
• D)The MPC = 0.8.

---

Definitions:

Terminal Bronchiole

The smallest airways in the lungs, located at the end of the bronchiole tree, not directly involved in gas exchange.

Secondary Bronchus

Branches of the primary bronchi that lead into each lobe of the lungs, further branching into the tertiary bronchi.

Copper Pipe

Tubing made from copper, commonly used in plumbing for its durability and resistance to corrosion.

Stiff

Describes an object or body part that is rigid, difficult to bend or move.