If the Marginal Propensity to Consume (MPC) Is 4/5, a Decrease

question 39

Multiple Choice

If the marginal propensity to consume (MPC) is 4/5, a decrease in government purchases by $10 billion, other things constant, will ultimately lead to a:

• A)$30 billion increase in aggregate demand in an economy.
• B)$10 billion increase in aggregate demand in an economy
• C)$10 billion decrease in aggregate demand in an economy.
• D)$50 billion decrease in aggregate demand in an economy.
• E)$8 billion decrease in aggregate demand in an economy.

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Definitions:

Nontariff Barrier

Measures other than tariffs that restrict imports or exports of goods and services, such as quotas and regulations.

Forum Selection Agreement

A contractual clause in which the parties choose the location where disputes between them will be resolved.

UCC

Denotes the Uniform Commercial Code, an extensive series of statutes that regulate every commercial transaction across the United States.

CISG

The United Nations Convention on Contracts for the International Sale of Goods, a treaty that provides a uniform set of rules for the international sale of goods.