If the MPC Were to Increase from 0

question 78

Multiple Choice

If the MPC were to increase from 0.75 to 0.8,then the government spending multiplier would:

• A)increase from 4 to 5.
• B)decrease from 5 to 4.
• C)increase from 0.2 to 0.25.
• D)decrease from 1.25 to 1.2.

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Definitions:

Error

A mistake or inaccuracy, which can occur in reasoning, perception, action, or judgment.

Judgment

The capability to reach reasoned decisions or sensible judgments.

Heuristic Thinking

A cognitive process that simplifies decision making by using practical methods or experiential rules of thumb, often at the cost of accuracy or thoroughness.

Elimination by Aspect Heuristic

A decision-making process where alternatives are discarded by systematically evaluating them against a set of criteria.