Suppose That Consumers Become More Pessimistic About the Future And

question 101

Multiple Choice

Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?

• A) Real GDP will decrease by $8 billion.
• B) Real GDP will decrease by $10 billion.
• C) Real GDP will decrease by $40 billion.
• D) Real GDP will decrease by $50 billion.

---

Definitions:

Sexual Behavior

Actions or practices related to the pursuit of sexual pleasure or reproduction.

James Papez

A neuroscientist known for proposing the Papez circuit, a model for emotion processing in the brain involving a series of interconnected brain regions.

Limbic System

A complex system of nerves and networks in the brain, controlling basic emotions and drives such as fear, pleasure, and anger.

Emotion

A complex psychological state that involves a subjective experience, a physiological response, and a behavioral or expressive response.