Use the Aggregate Expenditures Model and Assume the Marginal Propensity

question 181

Multiple Choice

Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.90. A decrease in government spending of $1 billion would result in a decrease in GDP of:

• A)$0.
• B)$0.9 billion.
• C)$1.0 billion.
• D)$9.0 billion.
• E)$10.0 billion.

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Definitions:

Erik Erikson

A developmental psychologist and psychoanalyst known for his theory on the psychological development of human beings, which outlines eight stages from infancy to adulthood.

Self-Actualization

The process of realizing and fulfilling one's talents and potentialities, considered to be the ultimate goal of personal development.

Abraham Maslow

A psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

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Refers to individuals who experience significant challenges in managing their emotions, which can affect their social interactions and daily functioning.