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In the Simple Aggregate Expenditure Model Where All Components of Aggregate

Question 201

Multiple Choice

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the slope of the aggregate expenditures curve is 0.8?


A) 1
B) 4
C) 5
D) Cannot be determined without information on marginal propensity to consume.

Correct Answer:

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