The Ratio of the Increase in Equilibrium Real GDP to the Increase

question 297

Multiple Choice

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the

• A)MPC.
• B)multiplier.
• C)MPS.
• D)consumption function.

---

Definitions:

Generalized Fisher Effect

A theory stating that the real interest rate is independent of monetary measures, with nominal interest rates adjusting to expected inflation.

Real Interest Rates

The interest rates adjusted for inflation, representing the true cost of borrowing and the real yield to lenders or investors.

Forward Exchange Rate

The rate agreed today for exchange of two currencies at a future date, used in forward contracts.

Interest Rate Differentials

The difference in interest rates between two distinct economic or financial regions, affecting currency values and investment flows.