Exhibit 16A-4 Macro AD\AS Models as Shown in Exhibit

question 21

Multiple Choice

Exhibit 16A-4 Macro AD\AS Models As shown in Exhibit 16A-4, assume the marginal propensity to consume MPC equals 0.80. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment.

• A)increased by $2 trillion
• B)decreased by $2 trillion
• C)decreased by $.40 trillion
• D)increased by $.40 trillion
• E)increased by $.80 trillion

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Definitions:

Human Fossil Record

The collection of all known fossils of ancient humans and their immediate ancestors, providing insight into the evolution of Homo sapiens.

Ground Dwellers

Organisms that live and spend most of their life on the ground as opposed to in trees or water.

Strepsirhines

The subdivision within the primate order based on shared genetic characteristics; includes lemurs and lorises.

Apes

A group of primates that includes gibbons, orangutans, gorillas, chimpanzees, and humans, characterized by their lack of tails and more advanced cognitive abilities compared to other primates.