An Estimate of the MPC in the U

question 95

Multiple Choice

An estimate of the MPC in the U.S. is 0.90. Paul Krugman, the 2008 Nobel Prize winner in economics, stated, "... you'd be hard pressed to argue for an overall multiplier as high as 2."
Www) nytimes.com, 11/10/2008
What factors could explain the difference between the MPC and Krugman's estimate of the multiplier?

• A) exports and investment
• B) investment and imports
• C) imports and taxes
• D) taxes and investment

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Definitions:

Public Choice Theory

An economic theory that studies how public decisions and policies are made, considering individuals in the public sector make choices largely based on their own interests, similar to those in the private sector.

Private Sector

The part of the economy that is owned and operated by private individuals and companies, not controlled by the state, focusing on profit generation.

Economic Organization

The structured and systematic way in which economic activity is arranged in a society, including the allocation of resources, production, and distribution of goods and services.

Economic Efficiency

The optimal distribution of resources to meet the needs and desires of a society, reducing waste and maximizing value.