If the Marginal Propensity to Save Is 0

question 381

Multiple Choice

If the marginal propensity to save is 0.1, then the government spending multiplier has a value of

• A)0.1.
• B)9.
• C)10.
• D)0.11.

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Definitions:

Pure Competition

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price determination by supply and demand.

Price-taking Behavior

Describes individuals or companies that accept market prices as given because they have no power to influence those prices.

Pure Competition

A market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit, leading to efficient outcomes.

Market Model

A theoretical construct that describes the workings of a market through a set of mathematical equations or principles, aiming to predict the outcome of market forces.