If the MPC Is 3/4 Then the Multiplier Is

question 319

Multiple Choice

If the MPC is 3/4 then the multiplier is

• A)4, so a $100 increase in government spending increases aggregate demand by $400.
• B)4, so a $100 increase in government spending increases output by $400.
• C)4/3, so a $100 increase in government spending increases aggregate demand by $400/3.
• D)4/3, so a $100 increase in government spending increases output by $400/3.

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Definitions:

Perception

The process by which individuals interpret and organize sensory information to understand the environment and make decisions.

Stimulants

Psychoactive drugs such as cocaine, amphetamines, nicotine, and caffeine that tend to elevate mood, arouse action, reduce feelings of fatigue, and decrease appetite.

Marijuana

A drug derived from the resin of the cannabis sativa plant. The effects of marijuana abuse include memory impairment, altered thought process, feelings of relaxation and euphoria, impaired coordination, and increased appetite.

Amphetamines

A class of stimulant drugs that increase activity in the brain and have effects such as increased energy and alertness.