Economics 9708 · AS & A Level · Economic growth

Economic growth — practice question

For a closed economy without government intervention, the equilibrium income is $25 million, the full employment income is $30 million, and the deflationary gap is $1 million. What conclusions can be drawn from this information?

  • AThe level of investment is $5 million.
  • BThe marginal propensity to consume is 5/4.
  • CThe marginal propensity to consume is 6/5.
  • DThe value of the investment multiplier is 1.5.

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