If the Marginal Propensity to Consume Is 5/6, and There

question 204

Multiple Choice

If the marginal propensity to consume is 5/6, and there is no investment accelerator or crowding out, a $20 billion increase in government expenditures would shift the aggregate demand curve right by

• A)$60 billion, but the effect would be larger if there were an investment accelerator.
• B)$60 billion, but the effect would be smaller if there were an investment accelerator.
• C)$120 billion, but the effect would be larger if there were an investment accelerator.
• D)$120 billion, but the effect would be smaller if there were an investment accelerator.

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Definitions:

Inventory Systems

Tools and processes for managing a company's stock of goods, including the tracking, ordering, storing, and using of inventory.

Distribution Centers

Facilities that store goods before they are distributed to stores or end consumers.

Retail Store Space

The physical area that a retailer utilizes to display products for sale to customers within a store.

Four Ps

A marketing mix model that encompasses product, price, place, and promotion strategies in a business.