Exhibit 15-5  Aggregate Demand and Supply Model Suppose the Economy

question 201

Multiple Choice

Exhibit 15-5  Aggregate demand and supply model Suppose the economy in Exhibit 15-5 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E₂ and reduce inflation by:

• A) increasing government tax revenue by $6 billion.
• B) decreasing government tax revenue by $6.2 billion.
• C) decreasing government tax revenue by $200 billion.
• D) increasing government tax revenue by approximately $66 billion.
• E) decreasing government tax revenue by approximately $66 billion.

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Definitions:

Self-awareness

An individual's recognition of their own personality, feelings, intentions, and longings.

Active Listening

A communication technique used in counseling, training, and conflict resolution, where the listener fully concentrates, understands, responds, and then remembers what is being said.

Client-centered Therapy

A psychotherapeutic approach developed by Carl Rogers emphasizing an empathetic, accepting environment that fosters self-awareness and personal growth.

Systematic Desensitization

A technique in behavioral therapy aimed at diminishing fears and anxiety by slowly exposing individuals to the object or situation they fear, while simultaneously teaching them relaxation techniques.