Exhibit 16A-3  Macro AD/AS Model

question 127

Multiple Choice

Exhibit 16A-3  Macro AD/AS Model

As shown in Exhibit 16A-3, 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 E ₁ to full employment.

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

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Definitions:

Knowledge Management

The process of capturing, distributing, and effectively using knowledge within an organization.

Processes

Processes refer to a series of actions or steps taken in order to achieve a particular end, often structured and repeatable to improve efficiency and effectiveness in operations.

Critical for Decision Making

Essential or crucial factors that significantly affect the outcome of the decision-making process, often determining success or failure.

Oceanic Crust

The type of thin, mafic crust that underlies the ocean basins.