The Smaller the Marginal Propensity to Consume

question 19

Multiple Choice

The smaller the marginal propensity to consume,

• A) the greater of the multiplier.
• B) the lower the value of the multiplier.
• C) the greater the initial change in real GDP.
• D) the greater the initial change in aggregate expenditures.

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Definitions:

Mortgage Interest

The interest paid on a mortgage loan, which may be deductible on U.S. federal income tax, reducing taxable income.

Prescription Medicines

Medications that can only be obtained with a doctor's written order and are eligible for certain tax exemptions when used for medical care.

Health Insurance Premiums

The amount paid, often on a monthly basis, for health insurance coverage.

Hospital Fees

Charges levied by hospitals for medical treatments, procedures, room occupancy, and other healthcare services provided to patients.