The Greater the Marginal Propensity to Consume (MPC) in the Economy

question 16

True/False

The greater the marginal propensity to consume (MPC) in the economy, the greater the spending multiplier.

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Definitions:

Constructive Obligation

An obligation that derives from an entity’s actions where: (a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities; and (b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

Legal Obligation

A duty enforceable by law, deriving from statutes, contracts, or legal precedents.

Equitable Obligation

An obligation based on fairness, ethics, or natural law, rather than on a contractual or legal requirement.

Present Obligation

An obligation that arises from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.