Which of the following must be true to have a closed economy…

Which of the following must be true to have a closed economy with no government, and yet the value of the investmet multiplier still increase?

  1. Actual saving has fallen
  2. Marginal propensity to save has fallen ✓
  3. Actual investment had fallen
  4. Average propensity to invest has fallen

Explanation

This answer correctly explains the economic concept. Economics studies how people make choices about limited resources.

The other options describe different economic ideas or situations. They don’t fit what this question asks.

Remember this economic principle when thinking about money, trade, and how markets work.