An Increase in the Marginal Propensity to Save from

question 52

Multiple Choice

An increase in the marginal propensity to save from .1 to .2 will cause

• A)an increase in the multiplier and a given change in autonomous consumption (c₀)to have a smaller effect on output.
• B)an increase in the multiplier and a given change in autonomous consumption (c₀)to have a larger effect on output.
• C)a reduction in the multiplier and a given change in autonomous consumption (c₀)to have a smaller effect on output.
• D)a reduction in the multiplier and a given change in autonomous consumption (c₀)to have a larger effect on output.

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Definitions:

Research and Development

The investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

Fixed Asset Turnover Ratio

A performance metric that evaluates how efficiently a company is using its fixed assets to generate sales.

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses from revenue.

Denominator

The bottom number in a fraction which indicates how many equal parts the whole is divided into.