Assume That an Economy's Real GDP Multiplier Is 4

question 97

Multiple Choice

Assume that an economy's real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?

• A) $500 billion spending cut.
• B) $500 billion spending increase.
• C) $125 billion spending cut.
• D) $125 billion spending increase.
• E) $2,000 billion spending cut.

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Definitions:

Consciousness

The ability to perceive and reason about one's own presence, emotions, cognitions, context, and life occurrences.

Peyote

A small cactus, known for its psychoactive properties, traditionally used in Native American rituals.

Native American Church

A religious organization that integrates Native American beliefs and practices with Christian elements, notably known for its use of peyote in ceremonies.

Circadian Rhythms

Within each 24-hour period, the regular fluctuation from high to low points of certain bodily functions and behaviors.