Question 27
HardOriginal questionRead the two statements and choose the correct option.
I. A higher MPC, with c̄ and Ī unchanged, gives a higher equilibrium income.
II. A higher autonomous investment, with the MPC unchanged, gives a higher equilibrium income.
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
Y = (c̄ + Ī) ÷ (1 − b): a larger b shrinks the denominator. I is true.
A larger Ī raises the numerator. II is true.
- Concept
- What raises equilibrium income
- Typical timeTypical
- 100 s
- Your timeYours
- —
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