Use the Aggregate Expenditures Model and Assume the Marginal Propensity

question 148

Multiple Choice

Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.80. A decrease in government spending of $1 billion would result in a decrease in GDP of:

• A)$0.
• B)$0.8 billion.
• C)$1.0 billion.
• D)$5.0 billion.
• E)$8.0 billion.

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Definitions:

Set Point

A theory suggesting that the body regulates its weight and energy balance through a biologically predetermined point.

Constant Weight

In physics and engineering, refers to a condition or experiment where the mass of an object remains unchanged throughout the process.

Body Weight

The total mass of an individual, often measured to assess health and nutritional status.

Set Point

A theory suggesting that the body maintains its weight and energy balance through internal regulatory mechanisms.