Exhibit 11-2 -Refer to the Graph in the Exhibit.Consider an Economy Characterized

question 67

Multiple Choice

Exhibit 11-2

-Refer to the graph in the exhibit.Consider an economy characterized by the aggregate expenditure line.How would a $100 increase in autonomous government spending affect real GDP?  

• A) It would decrease real GDP by $100.
• B) It would decrease real GDP by $200.
• C) It would increase real GDP by $100.
• D) It would increase real GDP by $200.

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Definitions:

Physiological Needs

Basic bodily requirements that are essential to maintaining life, such as food, water, and sleep, according to Maslow's hierarchy of needs.

Maslow's Hierarchy

A psychological theory proposing a five-tier model of human needs, from physiological needs to self-actualization.

Approach And Avoidance

A psychological conflict that arises when a goal or event has both attractive and unattractive aspects leading to a dilemma about approaching or avoiding it.

Fight Or Flight

A physiological reaction to perceived danger, preparing an individual either to confront the threat or escape from it.