If Short-Run Equilibrium Output Equals 10,000, the Income-Expenditure Multiplier Equals

question 64

Multiple Choice

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, the mpc equals 0.9, and potential output (Y*) equals 9,000, then transfers must be decreased by approximately ________ to eliminate any output gap.

• A)90
• B)100
• C)111
• D)1,000

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Definitions:

Ethical Dilemma

A situation where one must make a decision between two or more morally correct actions that cannot both be undertaken.

8th Amendment

An amendment to the U.S. Constitution that prohibits the federal government from imposing excessive bail, excessive fines, or cruel and unusual punishment.

Cruel and Unusual Punishment

Punishment that is considered unacceptable due to the suffering, pain, or humiliation it inflicts on the person subjected to it.

Deontological Theory

An ethical theory that suggests actions are morally right or wrong based on adherence to rules or duties, regardless of the outcomes.