In Macroland, Autonomous Consumption Equals 100, the Marginal Propensity to Consume

question 43

Multiple Choice

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Induced expenditure equals:

• A)0.25Y.
• B)320 + 0.25Y.
• C)0.75Y.
• D)290 + 0.75Y.

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Definitions:

Marginal Returns

The additional output resulting from a one-unit increase in the use of a variable input, keeping all other inputs constant.

Technical Efficiency

The ability of an entity to maximize output for a given set of inputs, using the least possible amount of resources.

Fixed Proportion

A production scenario where inputs are used in rigid, unchanging ratios to produce outputs.

Crew Members

Individuals who work together as part of a team, especially on ships, aircraft, or in film and television productions.