The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 30

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc) = 0.75
∙ net tax rate (t) = 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars. FIGURE 22-2
-Refer to Figure 22-2.What is the marginal propensity to spend (z) in this economy?

• A)0.15
• B)0.20
• C)0.40
• D)0.60
• E)0.75

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Definitions:

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