The MPC Is

question 9

Multiple Choice

The MPC is .8. Real GDP is $600 billion. The natural rate of real GDP is $800 billion. Policymakers choose to follow the aggregate expenditures model to design a tax policy to move the economy to full employment. Taxes should be:

• A) decreased by $40 billion.
• B) decreased by $50 billion.
• C) increased by $40 billion.
• D) increased by $50 billion.

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Definitions:

Nanometer

A unit of length in the metric system, equal to one billionth of a meter, often used to measure wavelengths of light and dimensions of molecules.

Picometer

A unit of length in the metric system, equal to one trillionth of a meter, used to measure extremely small distances.

Nucleolus

Specialized structure in the cell nucleus formed from regions of several chromosomes; site of assembly of the ribosomal subunits.

Ribosomal RNA

A type of RNA that, together with proteins, forms the structure of ribosomes, the cellular machinery responsible for protein synthesis in all living organisms.