Classical growth theory predicts that in the long run there will be
A) sustained increases in the productivity growth rate.
B) negative economic growth.
C) zero economic growth.
D) positive economic growth.
E) sustained increases in economic growth.
Question 2
If the marginal propensity to consume is ________, then a 2 trillion increase in disposable income increases consumption expenditure by 1.2 trillion.
If the marginal propensity to consume is ________, then a 2 trillion increase in disposable income increases consumption expenditures by 1.6 trillion.
A) 0.6; 0.8
B) 1.67; 2.25
C) 1.2; 1.6
D) 6.0; 8.0
E) None of the above because a 2 trillion increase in disposable income always leads to a 2 trillion increase in consumption expenditure.
