?

Macroeconomics

Free Version

Upgrade subject to access all content

Difficult

MPC: Citizens in China

MACRO-KRJEXW

Assume citizens in China have a much lower marginal propensity to consume than citizens of the United States. Assume there is a positive shock to investment of equal size in both China and the United States.

According to the Keynesian model, which country will have a stronger output response?

A

United States

B

China

C

Different marginal propensities to consume will not effect the strength of the output response.

D

There is not enough information to answer this question