Asked by
alyssa hanning
on Dec 16, 2024
Verified
Which of the following is true of the simple spending multiplier
A) It equals the ratio of the marginal propensity to consume to the marginal propensity to save.
B) It equals the difference between the marginal propensity to save and the marginal propensity to consume.
C) It is the reciprocal of the marginal propensity to save.
D) It is the reciprocal of the marginal propensity to consume.
E) It is the sum of the marginal propensity to consume and the marginal propensity to save.
Simple Spending Multiplier
The ratio of a change in output to a change in autonomous spending that initiated the change, representing how spending circulates through an economy.
Marginal Propensity
The portion of additional income that an individual is likely to spend on goods and services instead of saving.
- Evaluate and grasp the effects of the foundational spending multiplier concerning the marginal propensities to save and consume.
Verified Answer
LA
Learning Objectives
- Evaluate and grasp the effects of the foundational spending multiplier concerning the marginal propensities to save and consume.
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