If the Marginal Propensity to Save Is 0

question 400

Multiple Choice

If the marginal propensity to save is 0.25 in an economy with no imports or taxes, the multiplier equals

• A) 0.25.
• B) 0.75.
• C) 4.
• D) 1.33.

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Definitions:

Savings And Loan Associations

Specialized financial bodies that deal with accepting deposits for saving purposes and issuing various loans, especially for mortgages.

Lend Money

The act of giving money to another party with the expectation that it will be paid back, often with interest, at a later date.

Bank Charters

Legal documents issued by a governmental or regulatory body granting the right to operate as a bank and outlining the specific conditions under which the bank must operate.

Savers

Individuals or entities that set aside a portion of their disposable income, rather than using it for consumption expenditures.