In a Closed Economy That Does Not Have International Trade

question 61

Multiple Choice

In a closed economy that does not have international trade, the spending multiplier equals _____.

• A)1/MPS
• B)1/MPC
• C)1/(MPC-1)
• D)1/(1-MPS)
• E)1/(1+MPS)

---

Definitions:

Emotional Hunches

Are intuitive feelings or impressions that someone has, based on emotions rather than on logical or explicit reasoning.

Intuition

The ability to understand or know something immediately, based on feelings rather than facts or evidence.

Big Picture

Understanding of the broader, overall perspective or situation rather than just focusing on details.

Insight

An ability to know what information is relevant, to find connections between the old and the new, to combine facts that are unrelated, and to see the “big picture”