If the Marginal Propensity to Save Is 0

question 72

Multiple Choice

If the marginal propensity to save is 0.1 and government spending is raised by $5 billion,then total aggregate spending will rise by:

• A) $500 million.
• B) $5 billion.
• C) $10 billion.
• D) $50 billion.

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Definitions:

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction.

IFRS

International Financial Reporting Standards, a set of accounting rules and standards that define how transactions and other accounting events should be reported in financial statements. They are designed to be globally consistent to enhance international comparability and quality of financial statements.

Cash Flow Reporting

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Interest Paid

The amount paid over a period for the use of borrowed funds, typically expressed as an annual percentage of the loan amount.