Macroeconomic Equilibrium Is Stable in the Simple Model Because

question 32

Multiple Choice

Macroeconomic equilibrium is stable in the simple model because

• A) consumption falls more slowly than income when GDP is above equilibrium.
• B) consumption increases more slowly than income when GDP is below equilibrium.
• C) the marginal propensity to consume is less than unity.
• D) taxes cause disposable income to move at some fraction of the pace at which GDP moves.
• E) all of the above.

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Definitions:

Corpus Callosum

A large band of neural fibers connecting the two hemispheres of the brain, facilitating communication between them.

Prefrontal Lobotomy

A surgical procedure used in the past to treat mental illness, involving the severing of connections in the brain's prefrontal lobe.

Muscular Coordination

The ability of the body to allow for the smooth and efficient integration of movements across different muscle groups.

Cerebral Cortex

The outermost layer of the brain, involved in high-level functions such as thought, language, memory, and consciousness.