The Increase in Income Which Results from an Increase in Investment

question 54

Multiple Choice

The increase in income which results from an increase in investment spending would be greater the:

• A)smaller the MPS.
• B)smaller the APC.
• C)larger the MPS.
• D)smaller the MPC.

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.

Overconfidence Effect

The cognitive bias where an individual's subjective confidence in their judgments is greater than their objective accuracy.

Availability Heuristic

A cognitive shortcut based on the first examples that surface in one's thoughts when considering a particular topic, idea, strategy, or choice.