If the Spending Multiplier Is 5,what Is the Marginal Propensity

question 93

Multiple Choice

If the spending multiplier is 5,what is the marginal propensity to consume in the economy?

• A) 0.4
• B) -0.8
• C) 0.5
• D) 0.75
• E) 0.8

---

Definitions:

Smaller Firms

Companies with a relatively small number of employees, market share, or revenue, often characterized by more flexible operations.

Horizontal Merger

A business consolidation that occurs between firms operating in the same industry or sector.

Conglomerate Company

A large corporation comprised of diverse subsidiaries or businesses across various industries, often with different operational focus.

Vertical Merger

A merger between two or more companies that operate at different stages within the production process of the same industry.