If Investment Spending Decreases by $500 Billion and If MPC

question 97

Multiple Choice

If investment spending decreases by $500 billion and if MPC = 0.6,

• A) equilibrium GDP will rise by $1,250 billion
• B) equilibrium GDP will fall by $500 billion
• C) equilibrium GDP will fall by $1,250 billion
• D) equilibrium GDP will rise by $500 billion
• E) nothing will happen in the short run

---

Definitions:

Exposure Therapy

A psychological treatment that helps individuals confront their fears by gradual and repeated exposure to the feared object or context.

Facilitated Communication

A controversial technique where a facilitator helps a person with severe communication disabilities by supporting their hand or arm while they attempt to type or communicate through another device.

Light Exposure Therapy

A treatment method for seasonal affective disorder (SAD) and certain other conditions by exposure to artificial light.

Brain Region

A brain region is a distinct area of the brain identified by its structure, function, or both, which contributes to specific neurological or psychological functions.