Consider a simple macro model with demand- determined output. Which of the following parameters will produce the strongest automatic stabilizer?
A)MPC = 0.7, t = 0.1, m = 0.4
B)MPC = 0.9, t = 0.2, m = 0.4
C)MPC = 0.7, t = 0.3, m = 0.2
D)MPC = 0.8, t = 0.1, m = 0.2
E)MPC = 0.8, t = 0.2, m = 0.3

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The Answer of Consider a simple macro model with demand- determined output. Which of the following parameters will produce the strongest automatic stabilizer?
A)MPC = 0.7, t = 0.1, m = 0.4
B)MPC = 0.9, t = 0.2, m = 0.4
C)MPC = 0.7, t = 0.3, m = 0.2
D)MPC = 0.8, t = 0.1, m = 0.2
E)MPC = 0.8, t = 0.2, m = 0.3

Consider a Simple Macro Model with Demand- Determined Output