Use the Aggregate Expenditures Model and Assume an Economy Is

question 133

Multiple Choice

Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion which is $250 billion below full-employment GDP. If the marginal propensity to consume (MPC) is 0.60, full-employment GDP can be reached if government spending:

• A)increases by $60 billion.
• B)increases by $100 billion.
• C)increases by $250 billion.
• D)is held constant.

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Definitions:

Regular Customer

A customer who frequently purchases products or services from the same business, showing loyalty and consistency in their patronage.

Complete Refund

The process of giving back the full amount of money paid by a customer for a product or service, often due to dissatisfaction or a defect.

Assembly

The process of putting together components or parts to build a product or to gather for a specific purpose.

Fair Adjustment

An equitable modification or change made to correct or improve a situation, ensuring fairness to all parties involved.