Use the Following to Answer Questions

question 57

Multiple Choice

Use the following to answer questions
Exhibit: Aggregate Expenditures (AE)
in a Simplified Economy

-(Exhibit: Aggregate Expenditures (AE)
In a Simplified Economy)
Consider a simple economy that is made up of only two sectors, households and firms, and that all investment is autonomous.Further, disposable personal income = real GDP and the economy is currently producing at its level of potential real GDP.What is the marginal propensity to consume in this economy?

• A)0.5
• B)0.6
• C)0.75
• D)0.8

---

Definitions:

Köhler Effect

A phenomenon in social psychology where less capable members of a group are motivated to increase their effort on a task to match the performance levels of more capable members.

Productive Individuals

People who are consistently able to achieve high output within the expected timeframes, contributing significantly to their teams or projects.

Dominant Responses

The most common or likely reactions individuals exhibit in a given situation, often influenced by past experiences, instincts, or social norms.

Nondominant Responses

Reactions or actions that are not the most common or typical in a given situation, often requiring more cognitive effort.