Please answer all the questions, thank you. ct Question 11 0/1 pts Incorrect As
ID: 1160036 • Letter: P
Question
Please answer all the questions, thank you.
ct Question 11 0/1 pts Incorrect As the marginal propensity to consume (MPC) increases, the spending multiplier: remains constant. increases. becomes undefinable. Odecreases. The marginal propensity to consume (MPC) is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending (consumption) occurs with an increase in disposable income (income after taxes and transfers). Spending Multiplier. Spending multiplier (also known as fiscal multiplier or simply the multiplier) represents the multiple by which GDP increases or decreases in response to an increase and decrease in government expenditures and investment. Basically, if the MPC is larger, it means the economy is more inclined to spend. An economy with a large MPC will have a large spending multiplier. Remember that the formula is 1/MPS or 1/1-MPC. Plug in few numbers and see how a MPC of 0.25 and 0.50 compares. When MPC 25 then the multiplier is 1/(1-25)-1/.75-1.33 What is the multiplier when MPC .5?Explanation / Answer
a) When the MPC increases the multiplier increase. MPC is how much a person is spending its income subtracted by the saving. The higher the consumption the lower the saving will be and higher the multiplier will be.
b) "B"
Able to buy is all about demand curve. Able to produce is considered in the supply curve. The answer is real output people are willing and able to sell at a different price level.
c) The AD will tell about the amount of good people are able to buy. Answer is "A"
D) "C"
An increase in the price level will cause an upward movement along the existing AD curve.
e) "C"
A leftward shift in the SRAS curve.