If the MPS in an Economy Is

question 28

Multiple Choice

If the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion at each price level by:

• A)reducing government expenditures by $125 billion.
• B)reducing government expenditures by $20 billion.
• C)increasing taxes by $50 billion.
• D)increasing taxes by $250 billion.

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Definitions:

Fading

The gradual change of the stimulus controlling a response, such that the response eventually occurs to a partially changed or completely new antecedent stimulus.

Stimulus

Any object, event, or factor that elicits or is capable of eliciting a response from a sensory system or an organism.

Controlling

Exercising authority or influence over a situation or individual to dictate or direct outcomes.

Negative Reinforcement

A process in behavior modification where the removal of an unfavorable outcome or stimulus strengthens the likelihood of a desired behavior.