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:

Collective Bargaining Agreement

A written contract between an employer and a union representing the employees, outlining terms of employment, wages, hours, and working conditions.

Informal Agreement

An understanding or arrangement that is not formally documented but is recognized and respected by those involved.

Terms and Conditions

The set of rules and policies that govern employment contracts, including work hours, salaries, benefits, and job responsibilities.

Bargain Collectively

The process by which workers, through their unions, negotiate with their employers to establish the terms of employment, including wages, benefits, and working conditions.