If Government Increases Its Purchases by $15 Billion and the MPC

question 193

Multiple Choice

If government increases its purchases by $15 billion and the MPC is 2/3, then we would expect the equilibrium GDP to

• A)increase by $30 billion.
• B)increase by $45 billion.
• C)decrease by $35 billion.
• D)increase by $50 billion.

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Definitions:

Ambiguity

The quality of being open to more than one interpretation; inexactness or uncertainty in meaning.

Contextual Cues

Environmental or situational indicators that help to interpret behaviors, events, or concepts within a specific context.

Narratives Interpretation

involves the analysis and understanding of the underlying meanings and implications of stories or accounts of events.

Chronological Order

The arrangement of events in the sequence of their occurrence in time.