With Which of the Following Marginal Propensities to Consume Would

question 9

Multiple Choice

With which of the following marginal propensities to consume would a given change in disposable income have the smallest effect on aggregate demand?

• A)0.2
• B)0.4
• C)0.6
• D)0.8

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Definitions:

Unfavorable Balance

A situation where a country imports more than it exports, resulting in a trade deficit.

Balance of Trade

The difference in value between a country's imports and exports over a given period, indicating trade surplus or deficit.

Tariffs

Taxes imposed by a government on imported or exported goods to regulate trade, often used to protect domestic industries from foreign competition.

Merchandise Trade Deficit

The situation that occurs when a country imports more goods than it exports, leading to a negative trade balance.