Consider a Simple Macro Model with a Constant Price Level

question 21

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import) .

• A)z = MPC(1 - t - m)
• B)z = tY - mY
• C)z = MPC - (1 - t- m)Y
• D)z = MPC - (1 - t - m)
• E)z = MPC(1 - t)- m

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