A Marginal Propensity to Consume of 0

question 118

True/False

A marginal propensity to consume of 0.75 and a marginal propensity to import of 0.05 are associated with an open-economy spending multiplier of 3.33.

---

Definitions:

Fungible Goods

Items that are interchangeable and indistinguishable from one another in terms of quality and characteristics, making them easily replaceable.

Bona Fide Purchaser

A person who purchases property in good faith without notice of any prior claims, liens, or encumbrances.

Buyer in the Ordinary Course of Business

A purchaser who buys goods in good faith, without notice that the sale violates the rights of another party, in the usual and regular course of the seller’s business.

Bailee

An individual or entity that has been given temporary custody but not ownership of someone else's property.