Suppose the Price Level Is fiXed, the MPC Is 0

question 133

Multiple Choice

Suppose the price level is fixed, the MPC is 0.8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly) , government should

• A) increase government expenditures by $200 billion.
• B) reduce taxes by $200 billion.
• C) increase government expenditures by $40 billion.
• D) reduce taxes by $160 billion.

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Definitions:

Relationship Orientations

The inclination or preference towards certain types of interactions or bonds with others, influencing personal connections.

Social Identity

An individual's sense of who they are, based on their group membership(s).

Virginians

Residents or natives of Virginia, a state in the Southeastern and Mid-Atlantic regions of the United States.

Categorical Imperative

The Categorical Imperative is a foundational concept in moral philosophy introduced by Immanuel Kant, which suggests that one should act only according to that maxim through which you can at the same time will that it becomes a universal law.