If the MPC = 0

question 17

Multiple Choice

If the MPC = 0.8, what is the government purchases multiplier?

• A) 0.20
• B) 0.50
• C) 2
• D) 5

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Definitions:

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan's outstanding balance.

Consumption

The act of households consuming both goods and services.

Endowment

The total resources owned or provided by an entity, including tangible and intangible assets.

Intertemporal Indifference Curve

A graphical representation showing different combinations of consumption at two different points in time among which a consumer is indifferent, reflecting time preferences for consumption.