Consider a Simple Macro Model with a Constant Price Level

question 72

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 one,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.

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Definitions:

Efficient Production

The process of producing goods or services in a way that minimizes waste and maximizes the utilization of resources.

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Opportunity Cost

In decision-making, the loss incurred by not opting for the immediate next best alternative.