In the Keynesian Model, an Increase in Real Autonomous Spending

question 303

Multiple Choice

In the Keynesian model, an increase in real autonomous spending results in a greater increase in real Gross Domestic Product (GDP) if

• A) the marginal propensity to consume (MPC) is lower.
• B) the marginal propensity to consume (MPC) is higher.
• C) the average propensity to save (APS) is higher.
• D) the average propensity to save (APS) is lower.

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Definitions:

Costly Activities

Activities that involve a significant expenditure of resources such as time, money, or effort.

New Product

An item or service that has been recently developed or introduced to the market, offering new or improved features.

Minimum Wage Control

Regulatory measures that set the lowest hourly rate of pay that employers can legally offer their employees.

Fringe Benefits

Additional compensation provided to employees beyond their normal salaries or wages, such as health insurance, retirement plans, and paid time off.