Consider the Calculation: Which of the Following Is the Answer

question 19

Multiple Choice

Consider the calculation: Which of the following is the answer to this question with the correct number of significant digits?

• A)3
• B)3.0189
• C)3.019
• D)3.0

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Definitions:

Aggregate Expenditure

The total amount of spending in the economy that includes consumption, investment, government purchases, and net exports.

Simple Spending Multiplier

The ratio of a change in real GDP demanded to the initial change in spending that brought it about; the numerical value of the simple spending multiplier is 1/(1 + MPC); called “simple” because only consumption varies with income.

Marginal Propensity

Describes the portion of additional income that an individual is willing to spend on consumption rather than saving.

Off-Balance Sheet Financing

Off-balance sheet financing is the use of funding or financial activities not recorded on the company's balance sheet to keep debt ratios low.