If the Marginal Propensity to Save Is 0

question 363

Multiple Choice

If the marginal propensity to save is 0.25, investment spending is $600 million, and the government increases its transfers by $100 million, then real GDP increases by:

• A)$25 million.
• B)$150 million.
• C)$300 million.
• D)$1,800 million.

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Definitions:

Labor-Market Discrimination

The practice of unfairly treating individuals differently in employment decisions based on characteristics unrelated to their job performance, such as race, gender, or age.

Higher Salary

An increased amount of money earned by an employee for their work, often due to promotions, skill upgrades, or market demand for their role.

Identical Characteristics

A term describing goods, services, or entities that have the same attributes and qualities, making them indistinguishable in certain respects.

Wage Differentials

The variations in wage rates due to differences in occupation, sector, qualifications, and experience among workers.