National Income and Price Determination

The larger the MPC, the smaller the spending multiplier.

The larger the MPC, the larger the spending multiplier.

The relationship between the MPC and the size of the spending multiplier is indeterminate.

The MPC has no impact on the size of the spending multiplier.

The raised savings tendencies counterintuitively enhance the government's attempt to boost activity given the portion kept out of immediate transactions is invested long-term, creating lasting beneficial impacts on infrastructure projects and others.

Sudden shifts towards saving typically leave governmental interventions unaffected. The theory holds that regardless of individual decisions, systemically mechanisms tend to ensure a maintained balance between the private and public sectors over time.

While intuitively one would expect increased thriftiness to undermine attempts to energize economic conditions, in actuality, proper adjustment factors like interest rates and investment opportunities present themselves adequately compensate for the resulting equilibrium shift favoring prudence.

The unexpected MPS surge could dampen projected gains since a larger share of incrementally earned is saved instead of being spent, amplifying the initial stimulus's potency through multiplied cycles of re-spending at the household level.

Consumer spending may rapidly decline due to decreased money supply growth rates only.

Higher interest rates might slow down economic growth temporarily.

There might be an immediate increase in aggregate demand beyond potential output.

Employment levels could rise drastically due to lower production costs.

It fluctuates unpredictably

It increases

It remains constant

It decreases

Changes in spending do not affect overall output.

The marginal propensity to consume (MPC) is constant.

The marginal propensity to consume (MPC) is zero.

The economy is operating below its potential output.

There would be no change in aggregate demand.

It would increase by twice the amount of the tax increase.

It would decrease by twice the amount of the tax increase.

It would decrease by half the amount of the tax increase.

Provide Subsidies to Domestic Businesses

Implement Tariffs on Foreign Imports

Reduce Personal Income Taxations

Increase Government Expenditure

Import quantities would likely increase since foreign goods become cheaper in terms of the domestic currency.

Imports quantities would remain unchanged, given that exchange rate movements do not alter consumers' purchasing behavior.

Import quantities may increase even further if domestic consumers perceive foreign products as superior irrespective of cost.

Import quantities would decrease, as domestic consumers may switch to more expensive local products.

Devaluation of domestic currency against foreign currencies

Increased business investments

Mandatory reduction of stock market trading hours

High inflationary pressure on consumer goods

Net exports are likely to decrease as domestic goods become relatively more expensive abroad.

Net exports may increase because domestic consumers find foreign goods less attractive price-wise.

Appreciation of the currency might encourage foreign investors, leading to an increase in net exports as they invest in domestic goods.

There will be no significant impact on net exports since exchange rates primarily affect financial markets rather than trade.