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:

Domestic Production

The total output of goods and services produced by a nation's economy within its territory.

Domestic Price

The value of merchandise or services within a nation's boundaries, unlike the prices set for global or export markets.

Free Trade

Global commerce conducted freely without the imposition of tariffs, quotas, or any limitations.

Leather Wallets

Small, flat cases made from leather, designed to hold personal items such as cash, credit cards, and identification documents.