If the MPC Is 3/4 Then the Multiplier Is

question 319

Multiple Choice

If the MPC is 3/4 then the multiplier is

• A)4, so a $100 increase in government spending increases aggregate demand by $400.
• B)4, so a $100 increase in government spending increases output by $400.
• C)4/3, so a $100 increase in government spending increases aggregate demand by $400/3.
• D)4/3, so a $100 increase in government spending increases output by $400/3.

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Definitions:

Mean

The arithmetic average of a set of numbers, calculated by dividing the sum of the values by the count of the values.

Population Mean

The average value of all elements in an entire population, representing a summary measure of the central tendency of the population.

Democrats

A member or supporter of the Democratic Party, one of the two major political parties in the United States.