Suppose That in an Economy with an MPC of

question 217

Multiple Choice

Suppose that in an economy with an MPC of .8 the government wanted to shift the aggregate demand curve leftward by $40 billion at each price level to remedy demand-pull inflation.It could:

• A)increase taxes by $10 billion.
• B)reduce government spending by $40 billion.
• C)reduce government spending by $5 billion.
• D)increase taxes by $20 billion.

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Definitions:

Situational Phobia

A fear confined to specific situations, such as flying or being in enclosed spaces, that can disrupt daily functioning.

Cleaning Compulsions

Repetitive behaviors or mental acts that an individual feels driven to perform in response to an obsession, often related to an excessive need for cleanliness and order.

Checking Compulsions

Repetitive behaviors or mental acts that a person feels driven to perform in response to an obsession, typically aimed at preventing some dreaded event or situation.

Mania

A mental state characterized by extremely elevated mood, energy, and activity levels, often associated with bipolar disorder.