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

question 111

Multiple Choice

In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, taxes must be:

• A)increased by $1 billion.
• B)decreased by $1 billion.
• C)increased by $1.33 billion.
• D)decreased by $1.33 billion.

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Definitions:

Unintentional Injuries

Wounds sustained unintentionally, commonly due to mishaps.

Topical Anesthetic

A medication applied to a specific area of the body to numb sensation, often used before minor procedures or to relieve pain from conditions affecting the skin.

Ethical Principle

A fundamental guideline or rule that drives moral behavior and decision-making, often based on notions of right and wrong.