If the Capital-Output Ratio Is Three,the Full-Employment GDP Is $5,100

question 56

Multiple Choice

If the capital-output ratio is three,the full-employment GDP is $5,100 billion,and intended investment is $750 billion,then a $60 billion increase in intended investment will increase full-employment GDP by ________ billion.

• A) $250
• B) $180
• C) $60
• D) $50
• E) $20

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Definitions:

APS

The Average Propensity to Save, which is the fraction of total income that households save rather than spend on consumption.

APC

Stands for Average Propensity to Consume, which is the fraction of income that households spend on consumption rather than saving.

APS

Automatic Payment System, a system allowing for automatic transfers of payments, often in financial contexts; the term can refer to multiple concepts depending on the context.

Savings

Money that is set aside from one's income or earnings for future use, often accumulating interest.