​If the MPC Changed from 0

question 263

Multiple Choice

​If the MPC changed from 0.8 to 0.6, then the spending multiplier would change from

• A)​5 to 2.5.
• B)​2.5 to 5.
• C)​0.8 to 0.6.
• D)​8 to 6.

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Definitions:

Return Percentage

The amount of gain or loss on an investment over a specified period, presented as a percentage of the investment's initial cost.

Market Risk Premium

The additional return expected by investors for taking on the risk of investing in the stock market over a risk-free rate.

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss, often represented by government bonds.

Portfolio Expected Return

The expected return on a portfolio is the weighted average of the anticipated returns of all the securities included in the portfolio, based on their proportions and expected performances.