If the MPC = 0

question 94

Multiple Choice

If the MPC = 0.75, then the spending multiplier must be:

• A) 3
• B) 4
• C) 5
• D) 1.25

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Definitions:

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Economically Desirable

Characteristics or actions that are considered beneficial for the economy, potentially enhancing efficiency or growth.

Private Markets

Markets where transactions are conducted directly between parties without public oversight or regulation, often relating to investments or services.

Allocate Resources

The process of distributing available resources among various projects, departments, or entities to achieve desired objectives.