Assume the Marginal Propensity to Consume Is 0

question 126

Multiple Choice

Assume the marginal propensity to consume is 0.8.If consumer spending increases by $20 billion, then real GDP will

• A)increase by $100 billion.
• B)decrease by $100 billion.
• C)increase by $16 billion.
• D)not change.

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Definitions:

Available-for-sale Security

A financial instrument held by a firm not classified as held-for-trading or held-to-maturity, and thus can be sold before maturity.

Management's Intent

Refers to the objectives and plans of the organization's management, often used to guide decisions and strategy.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

International Customer

A client or buyer who purchases goods or services from a business located in a different country.