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

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Question 41

Following an infrastructure stimulus, a government injects £8 billion into an open economy. This injection results in a £20 billion cumulative increase in the equilibrium level of national income.

In this economy, the marginal propensity to import ( $MPM\text{MPM}$ ) is estimated to be 0.15, and the marginal rate of taxation ( $MPT\text{MPT}$ ) is 0.10.

Assuming all other things remain equal, what is the marginal propensity to save ( $MPS\text{MPS}$ )?

0.15

0.25

0.40

0.60

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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