If the Marginal Propensity to Consume Is 0

question 23

Multiple Choice

If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $115 billion increase in government expenditures would shift the aggregate demand curve right by

• A)$460 billion, but the effect would be larger if there were an investment accelerator.
• B)$460 billion, but the effect would be smaller if there were an investment accelerator.
• C)$345 billion, but the effect would be larger if there were an investment accelerator.
• D)$345 billion, but the effect would be smaller if there were an investment accelerator.

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Definitions:

Wagering Contracts

Agreements where the parties stand to win or lose based on the outcome of an uncertain event, often considered unenforceable due to their speculative nature.

Warranty

A guarantee given to the purchaser of an item by the seller, promising repair or replacement in case of defects within a certain period of time.

Codicil

A supplement or addition made to alter, explain, or otherwise modify a will, without revoking it entirely.

Working Sprinkler System

A fully operational fire suppression system installed in buildings that activates automatically in response to detectable signs of fire, such as heat or smoke.