Assume the Economy Is in Recession and Real GDP Is

question 64

Multiple Choice

Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.90, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending) . If an increase of $1,000 billion aggregate demand can restore full employment, the government should:

• A) increase spending by $100 billion.
• B) decrease spending by $790 billion.
• C) increase spending by $1,000 billion.
• D) increase spending by $250 billion.

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Definitions:

Situated Meanings

The meanings that emerge from specific contexts or situations, emphasizing how interpretation is influenced by the environment.

Abstract Meanings

deals with ideas and concepts that are not concrete or tangible but exist as thought or understanding.

Antidiuretic Hormone

A hormone that regulates water balance in the body by controlling the amount of water reabsorbed by the kidneys.

Aldosterone

A steroid hormone produced by the adrenal glands that regulates sodium and potassium balance in the blood, influencing blood pressure and fluid balance.