If the Spending Multiplier Equals 6 and Equilibrium Real GDP

question 14

True/False

If the spending multiplier equals 6 and equilibrium real GDP is $32 billion below potential real GDP, then total planned expenditures need to decrease by approximately $5.33 billion to close the recessionary gap.

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Definitions:

Projection and Denial

Defense mechanisms; projection involves attributing one's own unacceptable thoughts or feelings to others, while denial involves refusing to acknowledge reality or facts.

Projection and Rationalization

Projection and rationalization are defense mechanisms; projection involves attributing one's own unacceptable thoughts or feelings to others, while rationalization involves justifying behaviors or feelings with seemingly logical reasons to avoid the true explanation.

Rationalization

A coping technique that involves providing logical or rational justifications for questionable behaviors or emotions to sidestep their real causes.

Stockholm Syndrome

A psychological response wherein hostages or abduction victims develop a bond with their captors during captivity.