Multiple Choice
Suppose aggregate output is demand- determined. If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending, then equilibrium income will and the marginal propensity to spend must equal .
A) increase by $40 billion; 0.75
B) decrease by $10 billion; 0.25
C) increase by $10 billion; 4.0
D) increase by $40 billion; 0.25
E) decrease by $40 billion; 0.75
Correct Answer:
Verified
Correct Answer:
Verified
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