Exhibit 11-2 Aggregate Demand and Supply Model Suppose the Economy

question 4

Multiple Choice

Exhibit 11-2 Aggregate demand and supply model Suppose the economy in Exhibit 11-2 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by:

• A)decreasing government spending by $750 billion.
• B)decreasing government spending by $100 billion.
• C)increasing government spending by $25 billion.
• D)decreasing government spending by $25 billion.
• E)None of these.

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Definitions:

Skill-based Pay

A compensation strategy that rewards employees for the skills and knowledge they possess, rather than for their job title or position.

Organization Performance-based

Refers to the concept of evaluating and managing the performance of an organization based on specific outcomes and results rather than solely on processes.

Profit Sharing

A company policy of distributing a portion of its net profits to its employees.

Team

A group of individuals working together towards a common goal, often characterized by collaboration, communication, and mutual support.