Author Question: ________ is fixed when moving along the aggregate supply curve. A) The real wage rate B) Real ... (Read 114 times)

Caiter2013 · **on:** Jun 29, 2018

________ is fixed when moving along the aggregate supply curve.

A) The real wage rate
B) Real GDP
C) Employment
D) The price level
E) The money wage rate

Question 2

Suppose the economy has no income taxes or imports. How is the size of the expenditure multiplier related to the marginal propensity to consume? What is the multiplier if the MPC equals 0.25? If the MPC equals 0.50? If the MPC equals 0.90?

What will be an ideal response?

6ana001 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

E

Answer to Question 2

The multiplier equals , so the larger the MPC, the larger the multiplier. If the MPC is 0.25, the multiplier equals = = 1.3. If the MPC is 0.50, the multiplier equals = = 2.0. And if the MPC is 0.90, the multiplier equals = = 10.0. So, the larger the MPC, the larger the multiplier.