Suppose Aggregate Output Is Demand-Determined

question 71

Multiple Choice

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $12 billion,the marginal propensity to spend must be

• A)1/3.
• B)1/2.
• C)2/3.
• D)4/5.
• E)3.

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Definitions:

Relationship

A connection, association, or involvement between two or more parties.

Correlation

describes the statistical relationship between two variables, indicating whether and how strongly they change together, without implying causation.

Variables

Elements that can be changed or varied, especially those used in experiments to determine their effects on outcomes.

Relationship Strength

The degree of intensity or closeness in a relationship, which can influence its impact and significance.