Which of the following is true?
A) The structural deficit changes over the business cycle.
B) MPS + MPC = 1.
C) At equilibrium expenditure, unplanned changes in inventory must be positive.
D) In the real business cycle model, there is no AD curve.

Question

Quizplus · Accepted Answer

The equation MPS + MPC = 1 is a fundamental concept in macroeconomics known as the consumption function. It states that the total amount of income in an economy is either consumed (MPC) or saved (MPS), and the two variables always add up to 1. This equation holds true regardless of the business cycle or other economic conditions. None of the other options are correct.

Which of the Following Is True