Suppose That Congress Allocates $5 Billion to an "Energy-Efficient Appliance

question 54

Multiple Choice

Suppose that Congress allocates $5 billion to an "energy-efficient appliance rebate" program.It also raises taxes by $5 billion to keep the deficit from growing.If the marginal propensity to consume is 0.8,what is the effect on equilibrium GDP?

• A)GDP does not change.
• B)GDP increases by $25 billion.
• C)GDP increases by $4 billion.
• D)GDP increases by $5 billion.

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Definitions:

Perpetual Existence

A legal concept indicating that a corporation can continue indefinitely, regardless of changes in ownership or management.

Charitable Donations

Financial or material contributions given to nonprofit organizations or causes for philanthropic purposes.

Implied Powers

Powers not explicitly stated in a constitution or legal document but deemed necessary to execute the powers that are expressly stated.

De Facto Corporation

Latin for “corporation in fact” a corporation that has not substantially met the requirements of the state incorporation statutes.