(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given

question 171

Multiple Choice

(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, assume full employment income is $1,000 while the current equilibrium is $750. If the government wants to eliminate the recessionary gap while maintaining a balanced budget, it must increase spending by

• A) $100 and decrease taxes by $100.
• B) $250 decrease taxes by $250.
• C) $100 and increase taxes by $100.
• D) $250 increase taxes by $250.

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Definitions:

Habituation

Decreased responsiveness to a stimulus after repeated presentations of the stimulus.

Birth Trauma

A term used to describe physical injury or psychological damage experienced by a newborn during the birthing process.

Sensory Systems

The parts of the nervous system responsible for processing sensory information from the environment, including sight, sound, taste, touch, and smell.

Cognitive Resources

Mental capabilities and capacities a person can draw upon for processing information and solving problems.