The marginal propensity to consume (MPC)
Not what you're looking for?
The marginal propensity to consume (MPC) equals 0.3, and the marginal propensity to import (MPm) is 0.1. If Americans suddenly increase their desire for European cars and the MPm increases to 0.3, on the basis of the Keynesian model of output determination:
A) the multiplier will rise by 20% of its original value.
B) an increase in government spending of 100 will have no effect on GDP
C) an increase in GDP of 100 will cause imports to rise by 30
D) all of the above
E) none of the above
Purchase this Solution
Solution Summary
The marginal propensity to consume (MPC) is determined.
Solution Preview
This is an Open Economy Multiplier question,
The Multiplier =1/(1 - (MPC - MPM) )
At ...
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.