Consider the consumption function . If
, a 2 percent demand shock:
A) raises short-run output by 1 percent.
B) raises short-run output by 0.5 percent.
C) raises short-run output by 4 percent.
D) reduces short-run output by 4 percent.
E) has no impact on short-run output.

Question

Consider the consumption function  . If  
, a 2 percent demand shock:
A) raises short-run output by 1 percent. 
B) raises short-run output by 0.5 percent. 
C) raises short-run output by 4 percent. 
D) reduces short-run output by 4 percent. 
E) has no impact on short-run output.

Quizplus · Accepted Answer

The Answer of Consider the consumption function  . If  
, a 2 percent demand shock:
A) raises short-run output by 1 percent. 
B) raises short-run output by 0.5 percent. 
C) raises short-run output by 4 percent. 
D) reduces short-run output by 4 percent. 
E) has no impact on short-run output.

Consider the Consumption Function