If Households Save $40 Billion Less at Each Level of Income

question 148

Multiple Choice

If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

• A)intersect the 45-degree line at a real GDP of $40 billion
• B)shift upward by $40 billion
• C)shift downward by $40 billion
• D)shift upward by $200 billion because of the multiplier mechanism
• E)shift downward by $200 billion because of the multiplier mechanism

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Definitions:

Humanistic Personality Theories

Psychological theories that emphasize personal growth, self-awareness, and the inherent goodness of people, focusing on subjective experiences.

Behavioural Perspective

An approach in psychology that focuses on observable behaviors rather than internal states, emphasizing the learning processes that shape behavior.

Reinforcement

In psychology, a process that increases the likelihood of a behavior by adding or removing stimuli following the behavior.

Superego

In psychoanalytic theory, the part of a person's mind that acts as a self-critical conscience, reflecting social standards learned from parents and teachers.