If the Marginal Propensity to Consume Is

question 150

Multiple Choice

If the marginal propensity to consume is .9 in a private closed economy,a $20 billion decline in investment spending will decrease:

• A) GDP by $20 billion.
• B) GDP by $100 billion.
• C) saving by $20.
• D) consumption by $200 billion.

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Definitions:

Outstanding Stock

The total shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.

Unlimited Liability

A legal structure in which the owners of a business are personally liable for all the business's debts, with no limit on the amount for which they can be liable.

Mutual Agency

A principle of partnership where each partner has the authority to bind the partnership in contract with third parties.

Governmental Regulations

Laws and rules established by governments to control or influence business practices and operations.