If No Fiscal Policy Changes Are Made, Suppose the Current

question 195

Multiple Choice

If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume (MPC) is 0.80, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:

• A) government spending by $200 billion.
• B) taxes by $100 billion.
• C) taxes by $1,000 billion.
• D) government spending by $1,000 billion.

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Definitions:

Biological Relatives

Individuals who are related to one another by genetic connections, such as parents, siblings, and offspring.

Anxiously Reactive

Characterized by a heightened response to threats or stress, often resulting in excessive worry, fear, or apprehension.

Danger-Detection System

The psychological and physiological mechanisms in humans and animals that allow for the identification and response to threats.

Hyperactive

Exhibiting behavior marked by an excessive level of activity, restlessness, and difficulty in maintaining attention or staying still.