The Size of the MPC Is Assumed to Be

question 25

Multiple Choice

The size of the MPC is assumed to be

• A) less than zero.
• B) greater than one.
• C) greater than zero but less than one.
• D) two or more.

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Definitions:

Short-Run Aggregate Supply

The aggregate volume of products and services that companies intend to sell within a brief period in the economy, based on existing price levels.

Long-Run Aggregate Supply

Represents the total production of goods and services in an economy at full employment, without any market frictions.

Aggregate Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in an economy.

Aggregate Demand Curve

A graph showing the relationship between the total quantity of goods and services demanded across all sectors of an economy and the price level, all else being equal.