If We Observe That Every Increase in Income of $120

question 165

Multiple Choice

If we observe that every increase in income of $120 million generates an increase in consumption of $80 million, then the simple multiplier is

• A)2/3.
• B)3/2.
• C)2
• D)3
• E)8

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Definitions:

Leisure

Time available for ease, relaxation, and activities one chooses to engage in beyond compulsory activities like work or chores.

Consumption

The use of goods and services by households or individuals, constituting one of the primary components of economic activity.

Nonlabor Income

Income received from sources other than employment, such as investments, pensions, or gifts.

Wage Rate

The amount of money that an employee is paid per unit of time, such as an hour, often analyzed in labor economics.