Consider a Simple Macro Model with Demand-Determined Output and the Following

question 82

Multiple Choice

Consider a simple macro model with demand-determined output and the following specific parameter values:
a) Marginal propensity to consume out of disposable income = 0.6
b) Marginal propensity to consume out of national income = 0.48
c) Marginal propensity to import = 0.23
The simple multiplier without government and foreign trade in this economy is ________ and the simple multiplier with government and foreign trade in this economy is ________.

• A) 1.67; 1.33
• B) 1.67; 4
• C) 2.5; 1.33
• D) 2.5; 2.5
• E) 2.5; 4

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Definitions:

Cognitive Therapist

A mental health specialist focused on identifying and correcting negative or distorted thinking patterns, beliefs, and attitudes.

Worst Case Scenario

Considering the most severe or unfavorable outcome in a situation, often used as a cognitive technique to manage anxiety.

Consciousness Raising

A process of increasing awareness about social, political, or personal issues, often used in social movements to foster change.

Irrational Beliefs

False or unreasonable beliefs or thoughts that are not based on reality or logical reasoning.