The Simple Multiplier

question 9

Multiple Choice

The simple multiplier

• A)when divided by consumption spending equals saving
• B)is defined as 1.0 divided by the marginal propensity to save
• C)is defined as 1.0 divided by the marginal propensity to consume
• D)is equal to the MPS plus the MPC
• E)is equal to the MPS minus the MPC

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Definitions:

Marginal Cost

The cost added by producing one extra item of a product. It's a critical concept in economics for determining the optimum production level.

Supply-Side Market Failures

Overallocations of resources that occur when private supply curves understate the full cost of producing a good or service.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at various prices.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity that suppliers are willing to offer for sale at that price.