Consider a Simple Macro Model with a Constant Price Level

question 98

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend in such a model is zero,the simple multiplier is

• A)zero.
• B)a positive number between zero and one.
• C)one.
• D)a positive number greater than one but less than infinity.
• E)infinitely large.

---

Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholder's equity.

Earnings Variability

The fluctuation or volatility in a company's earnings over time, indicating the uncertainty and risk associated with the company's performance.

Goodwill

An intangible asset representing the value of a company's brand name, customer relationships, employee relations, and other factors not physically tangible.

Dupont Analysis

A financial analysis framework that breaks down a company's return on equity into three component parts—profitability, asset efficiency, and financial leverage—to assess its financial performance.