In the Keynesian-Cross Model, If the MPC Equals 0

question 49

Multiple Choice

In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion increase in government spending increases planned expenditures by ______ and increases the equilibrium level of income by ______.

• A) $1 billion; more than $1 billion
• B) $0.75 billion; more than $0.75 billion
• C) $0.75 billion; $0.75 billion
• D) $1 billion; $1 billion

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Definitions:

Warranty

(1) An assurance, either express or implied, by one party that the other party can rely on its representations of fact. (2) In sales, a binding promise regarding a product in the event that the product does not meet the manufacturer's or seller's promises.

Proper Tender

The act of presenting an exact amount of money in the appropriate form as payment for a debt or obligation.

Endorsers Discharged

Refers to the situation where endorsers (persons who sign documents, typically negotiable instruments, to endorse them) are released from their obligations under the instrument.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a specified sum of money either on demand or at a specified future date.