Suppose the Price Level Is Constant,output Is Demand-Determined,and the Economy

question 89

Multiple Choice

Suppose the price level is constant,output is demand-determined,and the economy is closed with no government.If the marginal propensity to spend is 0.7,the simple multiplier is

• A)0.33.
• B)0.70.
• C)1.00.
• D)1.42.
• E)3.33.

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Definitions:

Promissory Note

A written, legally binding promise to pay a specified sum of money on a certain date or upon demand.

Face Amount

The nominal or dollar value printed on a financial instrument, such as a bond or life insurance policy, representing the amount due at maturity.

Maturity Value

The amount payable to an investor at the maturity date of an investment, including the principal and any remaining interest.

Maker

The party in a financial transaction who creates or issues the instrument, such as a check writer or bond issuer.