To Eliminate an AD Shortfall of $100 Billion When the Economy

question 4

Multiple Choice

To eliminate an AD shortfall of $100 billion when the economy has an MPC of 0.50,the government should increase spending by

• A)$200 billion.
• B)$100 billion.
• C)$50 billion.
• D)$500 billion.

---

Definitions:

Pollute

The introduction of contaminants into the natural environment that cause adverse change, harming living organisms and the environment.

Mixed Strategy

A strategic decision in game theory where players randomize their actions to keep opponents unsure of their intensions.

Equilibrium

A condition or state in which economic forces are balanced, resulting in a stable system where there is no incentive for change.

Maximin Strategies

Decision-making strategies that aim to maximize the minimum gain that can be achieved, often used in situations of uncertainty or competitive scenarios.