Mathematically, the Value of the Spending Multiplier in Terms of the Marginal

question 140

Multiple Choice

Mathematically, the value of the spending multiplier in terms of the marginal propensity to consume (MPC) is given by the formula:

• A) MPC − 1.
• B) (MPC − 1)/MPC.
• C) 1/MPC.
• D) 1/(1 − MPC).

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Definitions:

Polar

A description of a molecule with a distribution of electric charge leading to one end being positively charged and the other end negatively charged.

Carbohydrates

Organic compounds consisting of carbon, hydrogen, and oxygen, usually in the ratio of 1:2:1, providing energy through metabolism.

Lipids

A broad group of naturally occurring molecules that include fats, oils, waxes, and certain vitamins, characterized by their insolubility in water but solubility in organic solvents.

Disaccharide

A carbohydrate made up of two monosaccharide molecules bonded together, examples include sucrose and lactose.