Scenario 10

question 131

Multiple Choice

Scenario 10.2?A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7. Assume that the economy is initially in equilibrium.
-Refer to Scenario 10.2. What will happen to the equilibrium real GDP if a tourist visits the country and spends $100 that she brought with her?

• A) It will not change.
• B) It will increase by $100.
• C) It will increase by $200.
• D) It will increase by $143.
• E) It will increase by $90.

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Definitions:

Persepolis

An ancient ceremonial capital of the Persian Empire, located in modern-day Iran, known for its vast array of monumental buildings.

Elamites

An ancient civilization located in what is now southwestern Iran, known for their contributions to art, architecture, and governance systems.

Tigris River

One of the two major rivers in Southwest Asia, flowing through Turkey and Iraq, and known for its historical significance in ancient Mesopotamian civilizations.

Assyrians

An ancient Mesopotamian civilization known for its powerful empire, architectural innovations, and contributions to art and writing, flourishing mainly between the 25th and 7th centuries BCE.