Suppose the Value of Marginal Propensity to Save (MPS) Is

question 87

Multiple Choice

Suppose the value of marginal propensity to save (MPS) is 0.25, investment is £300 and autonomous consumption is £250 in a closed economy with no government sector. What is the equilibrium national output?

• A) £5500
• B) £7500
• C) £6250
• D) £2200

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Definitions:

Consolidated Net Income

The total net income of a parent company and its subsidiaries after eliminating intercompany transactions, presented as a single figure.

Downstream Transfer

Transactions where a parent company sells or transfers assets to its subsidiary.

Straight-Line Method

An accounting method of depreciation where the value of a fixed asset is reduced uniformly over its useful life.

Consolidated Financial Statement

Financial statements that aggregate the financial position and operational results of a parent company and its subsidiaries.