When an Economy Is Operating Well Below Its Full-Employment Capacity

question 5

Multiple Choice

When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 3/4, a $10 billion increase in investment will cause the equilibrium income to rise by

• A) $5 billion.
• B) $10 billion.
• C) $20 billion.
• D) $40 billion.

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Definitions:

Ageism

Refers to prejudice or discrimination against individuals based on their age.

Activism

Initiatives aimed at supporting, obstructing, guiding, or interfering in social, political, economic, or environmental change with the objective of altering societal norms.

Catalyst

A substance that increases the rate of a chemical reaction without itself undergoing any permanent chemical change.

Aging

The process of becoming older, a series of biological changes that occur in living organisms over time.