Consider a Simple Macro Model with Demand-Determined Output

question 138

Multiple Choice

Consider a simple macro model with demand-determined output.If z is the marginal propensity to spend out of national income,Y is national income and A is autonomous expenditure,then the simple multiplier is equal to

• A)z.
• B)1 - z.
• C)1/z.
• D)1/(1 - z).
• E)Y/(1 - z).

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Definitions:

Payroll Account

A bank account specifically used by businesses to process salary payments to their employees.

Safety Stock

Additional inventory kept to prevent stockouts due to variability in demand or supply lead time.

Banking Relationship

Refers to the business interactions and communications between a bank and its customers, including the services and products offered.

Immediate Decrease

A sudden decrease in value or amount, happening without delay or within a very short time frame.