Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 18

Multiple Choice

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. The marginal propensity to consume is 0.8. Suppose the equilibrium level of real GDP at the prevailing price is $500 billion below potential real GDP. All else constant, by how much should autonomous aggregate expenditures be increased to reach potential output?

• A) $625 billion
• B) $500 billion
• C) $400 billion
• D) $100 billion

Distinguish between different cognitive processes and learning strategies.

Recognize the influence of biological constraints on learning.

Understand the principles and applications of behavior modification techniques.

Comprehend the role of operant conditioning in behavior modification and biofeedback.

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Definitions:

Acid-test Ratio

A financial metric that assesses a company's ability to pay its current liabilities with its most liquid assets.

Liquidity Problems

Financial difficulties arising from an entity's inability to quickly convert assets into cash without significant loss, impacting its capacity to meet short-term obligations.

Acid-test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.

Quick Assets

Assets that can be quickly converted into cash without a significant loss in value, including cash, marketable securities, and accounts receivable.