If the Consumption Function Is Defined as C = 5,500

question 193

Multiple Choice

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

• A)0.1
• B)0.9
• C)9
• D)10

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Definitions:

Short-Run Aggregate Supply

A curve that shows the relationship in the short term between the price level and the quantity of output provided by firms when some input prices, especially wages, are fixed.

Sticky-Wage Theory

A hypothesis that wages are slow to adjust to the economic conditions, leading to potential unemployment or labor market imbalances.

Natural Rate

An economic theory concept referring to the level of any economic variable that is expected to prevail in the long term under natural conditions, without external influences.

Inflation Rate

The speed at which the average price level of goods and services increases, leading to a decrease in buying power.