During Normal Times, If the Marginal Propensity to Consumer Is

question 12

Multiple Choice

During normal times, if the marginal propensity to consumer is 3/4, and the government borrows $10 billion in order to increase spending by that amount, real output will expand by

• A) more than $40 billion, because both the additional borrowing and the additional spending will stimulate real output.
• B) $40 billion, because the net multiplier will be 4.
• C) less than $40 billion, because the additional borrowing will place upward pressure on real interest rates, weakening the impact of the multiplier.
• D) $10 billion, because during normal times, the government can borrow funds without any increase in interest rates.

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Definitions:

Hepatitis Vaccines

Immunizations designed to prevent infection by hepatitis viruses, primarily including Hepatitis A, B, and sometimes Hepatitis C.

Shots

Informally refers to injections administered with a needle and syringe, typically containing medication or vaccines.

Gastroenteritis

An inflammation of the stomach and intestines, typically resulting from bacterial toxins or viral infections, causing vomiting, diarrhea, and abdominal pain.

Abdominal Cramping

Painful contractions or tightening in the abdomen, often associated with digestive or menstrual issues.