If an Initial Increase in Government Spending of $100 Billion

question 101

Multiple Choice

If an initial increase in government spending of $100 billion leads to a total increase of $400 billion in income,the marginal propensity to consume in the economy is

• A) 0.4.
• B) -0.8.
• C) 0.5.
• D) 0.75.
• E) 0.8.

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Definitions:

Gastrointestinal Tract

The series of hollow organs joined in a long, twisting tube from the mouth to the anus, including organs like the stomach and intestines, involved in digesting food and absorbing nutrients.

Dipeptide

A molecule consisting of two amino acids joined by a single peptide bond.

Fatty Chyme

A semi-fluid mass of partly digested food enriched with fats, that moves from the stomach to the small intestine.

Cholecystokinin

A hormone that stimulates the digestion of fat and protein by triggering the gallbladder to contract and release bile.