Exhibit 17-2 Aggregate Demand and Supply Model

question 20

Multiple Choice

Exhibit 17-2 Aggregate demand and supply model

-Suppose the economy in Exhibit 17-2 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 spending by $50 billion.
• B)decreasing government spending by $6 billion.
• C)decreasing government spending by $50 billion.
• D)decreasing government spending by $100 billion.

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Definitions:

Lower Self-esteem

Refers to a lower assessment or evaluation of one's own worth or abilities, often associated with various mental health challenges.

Fear of Failure

An apprehension or anxiety about failing to achieve a goal or succeed in a task, which can inhibit risk-taking and limit opportunities.

Coping

The process of managing stressful or challenging situations by making efforts to solve problems or adjust to circumstances.

Grit

The combination of passion and perseverance towards long-term goals, regardless of obstacles or failures.