Assume That the MPC Is 0

question 173

Multiple Choice

Assume that the MPC is 0.75 and that the price level is "sticky." If the Federal Reserve increases the money supply and investment spending increases by $8 billion, then aggregate demand is likely to

• A) increase by $6 billion.
• B) increase by $8 billion.
• C) increase by $32 billion.
• D) decrease by $8 billion.

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Definitions:

Distortions

Alterations or misrepresentations of reality or information, often leading to inaccuracies in communication and perception.

Disruptive Behaviors

Actions that significantly impede the normal operations or activities in a workplace or learning environment.

Law of Effect

A principle suggesting that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are not.

OB Mod Strategies

Techniques drawn from operant conditioning to modify behavior in the organizational setting, focusing on reinforcement strategies to encourage desirable behaviors.