In a Short-Run Keynesian Model Where the Marginal Propensity to Consume

question 83

Multiple Choice

In a short-run Keynesian model where the marginal propensity to consume is 0.5, to offset a recessionary gap resulting from a $1 billion decrease in autonomous consumption, government purchases must be:

• A)increased by $1 billion.
• B)decreased by $1 billion.
• C)increased by $0.5 billion.
• D)increased by $2 billion.

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Definitions:

Interdependence

The mutual reliance between two or more groups, individuals, or systems where the actions of one affect the outcomes of the others.

Accommodation

Or smoothing, involves playing down differences and finding areas of agreement.

Conflict Management

Involves employing strategies to limit the negative aspects of conflict while increasing the positive aspects with the goal of improving learning and group outcomes.

Trivial

Insignificant or of little importance; not worth considerable attention or concern.