2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 14

In an open economy with a government sector, the marginal propensity to save ( $MPS\text{MPS}$ ) is 0.15, the marginal propensity to tax ( $MPT\text{MPT}$ ) is 0.10, and the marginal propensity to import ( $MPM\text{MPM}$ ) is 0.15.

What is the resulting change in national income if the government increases its expenditure on public infrastructure by $£18bn£18\text{bn}$ ?

$£7.2bn£7.2\text{bn}$

$£30.0bn£30.0\text{bn}$

$£45.0bn£45.0\text{bn}$

$£120.0bn£120.0\text{bn}$

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

A Level
Economics
2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

A Level
Economics AQA
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