During Normal Times, If the Marginal Propensity to Consumer Is

question 12

Multiple Choice

During normal times, if the marginal propensity to consumer is 3/4, and the government borrows $10 billion in order to increase spending by that amount, real output will expand by

• A) more than $40 billion, because both the additional borrowing and the additional spending will stimulate real output.
• B) $40 billion, because the net multiplier will be 4.
• C) less than $40 billion, because the additional borrowing will place upward pressure on real interest rates, weakening the impact of the multiplier.
• D) $10 billion, because during normal times, the government can borrow funds without any increase in interest rates.

Comprehend the definitions and components of health and wellness.

Identify physiological risk factors and their impact on health.

Incorporate health promotion and illness prevention strategies into patient care.

Assess and respond to different stages of behavior change in patients.

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Definitions:

Aggregate Demand

Cumulative need for every type of good and service in an economy, observed at a consistent overall price point across a chosen period.

Money Supply

The total economic monetary resources present at a specific time.

Money Demand

The desired holding of financial assets in the form of money (cash and demand deposits) that can be easily exchanged for goods and services.

Money Supply

The aggregate amount of monetary assets available for use in an economy at a given time.