Consider Two Economies,A and B

question 29

Multiple Choice

Consider two economies,A and B.Economy A has a marginal propensity to consume of 0.9,a net tax rate of 0.3 and a marginal propensity to import of 0.3.Economy B has a marginal propensity to consume of 0.9,a net tax rate of 0.1 and a marginal propensity to import of 0.3.Suppose there is an increase in autonomous investment of $5 billion in each of these economies.Which of the following statements is true?

• A)The AD curve shifts farther to the left in Economy B than Economy A.
• B)The AD curve shifts farther to the right in Economy B than Economy A.
• C)The AD curve shifts to the left the same amount in both economies.
• D)The AD curve shifts to the right the same amount in both economies.
• E)The simple multiplier is larger in Economy A.

---

Definitions:

Retention

the ability to store and recall information or experiences over time.

Audio Clips

Short segments of sound or music, usually taken from a longer recording or broadcast.

Popular Songs

Musical pieces that have gained widespread recognition and acceptance among the general public or within specific genres.

Storage

In the context of memory, the retention of encoded information over time, which can be accessed and retrieved later.