Assuming That MPC Is 0

question 170

Multiple Choice

Assuming that MPC is 0.75, equal increases in government spending and tax collections by $10 billion will

• A)leave the equilibrium GDP unchanged.
• B)increase the equilibrium GDP by $10 billion.
• C)increase the equilibrium GDP by $2.5 billion.
• D)reduce the equilibrium GDP by $10 billion.

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Definitions:

Psychometrics

The study dedicated to assessing cognitive functions and abilities.

Empiricism

The philosophical stance that knowledge comes primarily from sensory experience and observation.

Multifactorial Causation

The concept that complex outcomes, such as diseases or behaviors, result from interactions among multiple genetic and environmental factors.

Subjectivity

The quality of being based on or influenced by personal feelings, tastes, or opinions rather than external facts.