Author Question: Suppose the marginal propensity to consume is 0.63, the marginal propensity to import equals 0.08, ... (Read 122 times)

Engineer · **on:** Jun 30, 2018

Suppose the marginal propensity to consume is 0.63, the marginal propensity to import equals 0.08, and personal income taxes amount to 9 percent of GDP. The spending multiplier for this economy is equal to _____.
a. 0.54
b. 0.80
c. 1.25
d. 1.41
e. 1.85

Question 2

Which of the following explains why the quantity of a good demanded decreases when its price increases?
a. Consumer preferences change when the price of a good changes.
b. The nominal income of consumers falls when the price of a good increases.
c. Substitutes become relatively cheaper when the price of a good increases.
d. Complements become relatively cheaper when the price of a good increases.