Suppose That a Change in Trade Policies Leads to a $20

question 139

Multiple Choice

Suppose that a change in trade policies leads to a $20 billion increase in net exports. If the value of the multiplier is 2, what is the size of the shift in the aggregate demand after
The multiplier process works through the economy?

• A) $40 billion
• B) Less than $20 billion
• C) More than $40 billion
• D) Cannot be determined without information on the trade policies in question

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Definitions:

Group Goals

Objectives or outcomes that a group collectively seeks to achieve or accomplish.

Individualism

A social theory valuing the independence and self-reliance of the individual often over the group or collective society.

Actor-Observer Bias

A cognitive bias that explains the tendency to attribute one's own actions to external factors while attributing other people's behaviors to their internal characteristics.

Situational Pressures

The external forces or social situations that influence an individual's behavior, decision-making process, or feelings, often leading to changed or adapted behavior to fit the circumstance.