Suppose an Economy's Marginal Propensity to Consume (MPC)is 0

question 61

Multiple Choice

Suppose an economy's marginal propensity to consume (MPC) is 0.6.Then

• A)1 + MPC + MPC ² + MPC ³ = 1.844 and,if we continued adding up terms in this geometric series,we would get closer and closer to the multiplier value of 1.96.
• B)1 + MPC + MPC ² + MPC ³ = 1.844 and,if we continued adding up terms in this geometric series,we would get closer and closer to the multiplier value of 3.
• C)1 + MPC + MPC ² + MPC ³ = 2.176 and,if we continued adding up terms in this geometric series,we would get closer and closer to the multiplier value of 3.
• D)1 + MPC + MPC ² + MPC ³ = 2.176 and,if we continued adding up terms in this geometric series,we would get closer and closer to the multiplier value of 2.5.

---

Definitions:

Comparative Advantage

The ability of an individual or firm to produce a good or service at a lower opportunity cost than other producers.

Absolute Advantage

The capacity of a person, corporation, or nation to manufacture a product or provide a service at a lower unit cost than rival entities.

Motorcycles

No real economic term; in economics context, motorcycles might be discussed concerning market dynamics, production costs, and consumer behavior in the automotive industry.

Tractors

Motor vehicles specifically designed for the purpose of agricultural tasks, including plowing, tilling, and planting fields.