If I = $2,000,G = $4,000,T = $1,000,NX = $0,autonomous

question 55

Multiple Choice

If I = $2,000,G = $4,000,T = $1,000,NX = $0,autonomous consumption = $1,000 and the marginal propensity to consume is 0.6,what is the equilibrium value of output?

• A) $16,000
• B) $7,000
• C) $6,400
• D) $3,840
• E) $8,000

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Definitions:

Creative Insights

Sudden realizations or understanding that provide unique problem-solving ideas.

Incubation

Incubation is the process of maintaining controlled environmental conditions to facilitate the development of embryos or the growth of microorganisms.

Unconsciously

Operating or existing outside of conscious awareness or perception.

Spreading Activation

A model in cognitive psychology that explains how information is retrieved in the brain, suggesting that thoughts and ideas spread across networks of neurons.