Suppose Aggregate Output Is Demand Determined

question 68

Multiple Choice

Suppose aggregate output is demand determined.If the marginal propensity to spend is 0.5,and the MPC is 0.7,a $1 billion reduction in government purchases will cause equilibrium national income to ________ by ________.

• A)decrease; $3.33 billion
• B)decrease; $2.00 billion
• C)decrease; $1.50 billion
• D)increase; $2.00 billion
• E)increase; $3.33 billion

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Definitions:

Accord

An agreement in contract law where one party agrees to accept something different (often less) than what was initially agreed upon as satisfactory performance.

Satisfaction

The fulfilment of a requirement, obligation, or the to fulfillment of a condition stipulated in a contract.

Deviated Specifications

Instances where the actual specifications of a product or service differ from the initially agreed or standard specifications.

Contract Price

Contract price is the total financial cost agreed upon by all parties for the execution of the terms of a contract.