Suppose We Observe That an Increase in Government Spending of $10

question 43

Multiple Choice

Suppose we observe that an increase in government spending of $10 billion raises the total aggregate demand by $40 billion.If there is no crowding-out effect, what would be the marginal propensity?

• A)0.25
• B)0.4
• C)0.75
• D)4

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Definitions:

National Distribution

A distribution strategy that aims to cover an entire country, making products available across all regions.

Environmental Scan

The process of collecting, analyzing, and interpreting data about external influences, trends, and threats that could impact an organization's strategy or operations.

New-Product Strategy Development

The stage of the new-product development process that defines the role for a new product in terms of the firm’s overall objectives.

Idea Generation

The creative process of generating, developing, and curating new ideas, which can serve as solutions to problems or lead to the development of new products, processes, or services.