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Assume the Marginal Propensity to Consume Is 0

question 282

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Assume the marginal propensity to consume is 0.8 and potential output is $800 billion. If actual real GDP is $700 billion, which of the following policies would bring the economy to potential output?


Definitions:

Aggregation

The process by which smaller investment proposals of each of a firm’s operational units are added up and treated as one big project.

Investment Requirement

The minimum amount of money needed to invest in a particular venture, fund, or project.

Financial Plan

A comprehensive evaluation of an individual's or organization's current and future financial state by using currently known variables to predict future income, asset values, and withdrawal plans.

Forecast The Future

The practice of making predictions based on current and historical information, often using statistical models and analysis.

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