If the Government Purchases Multiplier Is 4 and a Change

question 61

Multiple Choice

If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand,we can conclude that

• A)Government spending decreased by $125 million.
• B)Taxes increased by $500 million.
• C)Taxes decreased by $100 million.
• D)Government spending decreased by $100 million.

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Definitions:

Amygdala

A region of the brain key to processing emotions, particularly fear and pleasure.

Fearless

Lacking fear; having the quality or ability to face danger or unknown situations without succumbing to fear.

Medulla

A part of the brainstem that controls vital life-sustaining functions such as heartbeat, breathing, blood pressure, and digestion.

Neural Wiring

The network of neurons and their connections in the brain which facilitate the transmission of signals and the operation of the nervous system.