Suppose Real GDP Is $800 Billion When the MPC Is

question 14

Multiple Choice

Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:

• A)$600 billion.
• B)$650 billion.
• C)$680 billion.
• D)$730 billion.
• E)$800 billion.

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Definitions:

Leptin

A hormone produced by fat cells that helps to regulate energy balance by inhibiting hunger, thereby influencing body weight and fat mass.

Biology Of Body Weight

The study of biological factors, such as genetics, metabolism, and hormone function, that influence body weight.

Set Point Theory

A theory suggesting that individuals have a genetically determined range of weight and temperature that their body regulates to maintain.

Dieting

The practice of eating food in a regulated manner to achieve or maintain a controlled weight.