Suppose That a Change in Trade Policies Leads to a $20

question 139

Multiple Choice

Suppose that a change in trade policies leads to a $20 billion increase in net exports. If the value of the multiplier is 2, what is the size of the shift in the aggregate demand after
The multiplier process works through the economy?

• A) $40 billion
• B) Less than $20 billion
• C) More than $40 billion
• D) Cannot be determined without information on the trade policies in question

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Definitions:

Asch Conformity Studies

A series of psychological experiments that demonstrated the extent to which an individual's own opinions are influenced by those of a majority group.

Collectivist Cultures

Societies or communities that prioritize the needs and goals of the group over individual desires, fostering strong ties and group identity.

Blind Conformity

The act of following group norms or expectations without critical thought or awareness of the consequences.

Empire Building

The practice of accumulating power and expanding influence within an organization, often for personal gains rather than for the benefit of the organization.