The Larger the Mpc, the ______ the Income-Expenditure Multiplier and the ______

question 156

Multiple Choice

The larger the mpc, the ______ the income-expenditure multiplier and the ______ the effect of a change in spending on short-run equilibrium output.

• A) larger; larger
• B) larger; smaller
• C) smaller; smaller
• D) smaller; larger

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Definitions:

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specific time period.

Subsidies

Subsidies are financial grants or support extended by governments to firms, individuals, or institutions to encourage the production or consumption of certain goods or services, or to support industries.

Domestic Firms

Refers to companies that operate within the country where they are based and conduct their business activities in the local market.

Subsidies

Financial contributions by a government or public body to support businesses, consumers, or economic sectors, reducing the price of goods and services or the cost of production.