If the MPC Were to Increase from 0

question 12

Multiple Choice

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

• A) increase from 4 to 5.
• B) decrease from 5 to 4.
• C) increase from 0.2 to 0.25.
• D) decrease from 1.25 to 1.2.

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Definitions:

Extending Credit

The practice of allowing a buyer to purchase goods or services now and pay for them at a later date, often involving the assessment of the buyer's creditworthiness.

Facilitating Function

Activities that assist in the movement of goods from the producer to the consumer, including transportation, storage, and financial services.

Channel Intermediaries

Organizations or individuals that act as middlemen in the distribution process, helping to move products from the manufacturer to the consumer.

Direct Channel

A method of distribution where a company sells its products or services directly to consumers without the use of intermediaries.