Suppose We Observe That an Increase in Government Spending of $10

question 43

Multiple Choice

Suppose we observe that an increase in government spending of $10 billion raises the total aggregate demand by $40 billion.If there is no crowding-out effect, what would be the marginal propensity?

• A)0.25
• B)0.4
• C)0.75
• D)4

---

Definitions:

Relationship

A connection or association between two or more people, entities, or concepts.

Marketing

The process of promoting, selling, and distributing a product or service, including market research and advertising.

Sales

The activities involved in selling products or services, including marketing, negotiation, and transaction processes.

Coffee Shop

A retail establishment that sells coffee, tea, and often light meals or pastries, providing a social or work space for customers.