If the Marginal Propensity to Consume (MPC)is 0

question 170

Multiple Choice

If the marginal propensity to consume (MPC) is 0.9, the spending multiplier will be

• A)10.
• B)1.11.
• C)0.9.
• D)0.1.

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Definitions:

Cognitive Biases

Systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Bounded Rationality

A concept that decision-makers are limited by the information they have, cognitive limitations, and finite time to make decisions.

Bounded Rationality

The concept that when individuals make decisions, their rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision.

Political Acceptability

The degree to which a policy, action, or decision is considered acceptable by political entities and the general public.