If the Marginal Propensity to Consume (MPC) Is 0

question 78

Multiple Choice

If the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to increase real GDP $200 billion, then by how much would they have to change taxes?

• A) − $240 million.
• B) − $200 million.
• C) − $180 million.
• D) − $50 million.

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Definitions:

Avoidant

A personality trait characterized by a pervasive pattern of social inhibition, feelings of inadequacy, and hypersensitivity to negative evaluation.

Frustration-aggression Hypothesis

A psychological theory suggesting that frustration often leads to aggressive behavior, as aggression is considered a result of being prevented from achieving a goal.

Displacement

A psychological defense mechanism in which a person redirects a negative emotion from its original source to a less threatening recipient.