Assume That an Economy's Real GDP Multiplier Is 4

question 97

Multiple Choice

Assume that an economy's real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?

• A) $500 billion spending cut.
• B) $500 billion spending increase.
• C) $125 billion spending cut.
• D) $125 billion spending increase.
• E) $2,000 billion spending cut.

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Definitions:

Leanest Form

A state or manner that is stripped down to the most essential elements, without any excess or waste.

Active Listening

The process of fully concentrating on what is being said, understanding the message, and responding thoughtfully.

Parallel Communication

A communication process where messages are conveyed through multiple channels simultaneously to prevent bottlenecking and enhance understanding.

Downward Communication

The flow of information from higher levels of an organizational hierarchy to lower levels, typically involving directives, updates, and feedback.