Suppose That, at the Equilibrium Level of Income in a Country

question 3

Multiple Choice

Suppose that, at the equilibrium level of income in a country, the country has a current Account (X-- M) deficit of 60. The country's marginal propensity to consume = 0.7, and the country's marginal propensity to import = 0.2. If contraction in imports by means Of reducing national income is the method to be used to eliminate the current account Deficit, by how much must national income be reduced?

• A) 30
• B) 60
• C) 120
• D) 300

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Definitions:

Psychological Theorists

Researchers and scholars who study and develop theories on how people think, feel, and behave.

Sociological Theorists

Scholars and researchers who specialize in developing theories to understand social behaviors, structures, and systems.

Retroactive Interference

A memory disturbance in which new information impairs the retention of previously learned information.

Proactive Interference

The phenomenon where old memories make it more difficult to learn and remember new information.