Scenario 10

question 123

Multiple Choice

Scenario 10.2 A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7.Assume that the economy is initially in equilibrium.
Refer to Scenario 10.2.What is the spending multiplier of this economy?

• A)2
• B)1.4
• C)0.7
• D)0.9
• E)Cannot be determined with the information given

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Definitions:

Events

Occurrences or happenings that are noteworthy.

Brain

The organ of the body in the head that controls functions, movements, sensations, and thoughts.

Interference Theory

A theory explaining how new information can interfere with the retrieval of old information from memory.

Forgetting

The loss or degradation of memory over time, a natural process that can be influenced by various factors such as relevance and frequency of memory retrieval.