Suppose That in an Economy with a MPC of

question 96

Multiple Choice

Suppose that in an economy with a MPC of .5 the government wanted to shift the aggregate demand curve rightward by $80 billion at each price level to expand real GDP.It could:

• A)reduce taxes by $160 billion.
• B)increase government spending by $80 billion.
• C)reduce taxes by $40 billion.
• D)increase government spending by $40 billion.

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Definitions:

Error Management Theory

A theory suggesting that humans are evolved to favor strategies that minimize the more costly type of errors in the dual nature of decision-making errors: false positives and false negatives.

Self-determination Theory

A psychological theory focused on motivation, particularly intrinsic forms of motivation, and the role of autonomy, competence, and relatedness in fostering well-being.

Reactance Theory

A psychological theory suggesting that people act to preserve their freedoms when they feel they are being threatened or eliminated.

Action Identification Theory

A psychological theory that examines how individuals understand and conceptualize their actions, ranging from low-level details to high-level purposes.