Multiple Choice
Suppose the marginal propensity to consume in Spain is 3/5, and the marginal propensity to save in Portugal is 1/10.Which of the following characterizes how the economy of each nation will be affected?
A) The spending multiplier will be larger in Spain than in Portugal.
B) The spending multiplier will be smaller in Spain nation than in Portugal.
C) Autonomous consumption will be higher in Spain than in Portugal.
D) Autonomous consumption will be lower in Spain than in Portugal.
Correct Answer:
Verified
Correct Answer:
Verified
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