If an Economy's Real GDP Increases from $100 Billion to $150

question 130

Multiple Choice

If an economy's real GDP increases from $100 billion to $150 billion, and at the same time its imports increase from $40 billion to $50 billion, then the marginal propensity to import

• A)decreases from 0.4 to 0.2.
• B)is greater than 0.2 and less than 0.4.
• C)is 0.2.
• D)is 0.36.
• E)is 0.4.

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Definitions:

Reversed

A decision or process that has been changed to go in the opposite direction, often used in the context of judicial decisions.

Payor Bank

The bank that dispenses the payment on a written draft or check upon presentation.

Drawee Bank

The financial institution upon which a check is drawn or which is directed to pay the specified amount.

Collecting Bank

A financial institution involved in processing items for payment, such as checks, on behalf of a depositor.