If the Marginal Propensity to Save in a Closed Economy

question 65

Multiple Choice

If the marginal propensity to save in a closed economy is 0.25 and a lump-sum tax is imposed, the slope of the economy's aggregate expenditures schedule will be:

• A).25.
• B)less than the slope before the imposition of the tax.
• C)greater than the slope before the imposition of the tax.
• D).75.

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Definitions:

Average Product

The output per unit of a particular input, calculated by dividing total output by the quantity of inputs.

Labor

Human effort, either physical or mental, used in the production of goods and services.

Average Product

The output per unit of input, calculated by dividing the total output by the number of units of the input.

Lawns Mowed

The activity of cutting the grass of a lawn to maintain its appearance and health.