Use the Aggregate Expenditures Model and Assume an Economy Is

question 152

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

Understand the concepts of different market structures, including pure competition, monopolistic competition, oligopoly, and monopoly.

Recognize the symptoms and causes of economic depression and inflation.

Identify the factors leading to economic expansion and contraction.

Comprehend the role of consumer demand in economic cycles.

---

Definitions:

NaI

Sodium iodide, an ionic compound often used in organic synthesis and as a supplement.

KBr

Potassium bromide, a chemical compound consisting of potassium (K) and bromine (Br), used mainly in photography and in medication.

AgBr

Silver bromide, a chemical compound used in photographic films and papers.

Lead(II) Nitrate

A white to colorless crystalline chemical compound used in making other lead compounds and some pyrotechnics.