If the Crowding-Out Effect Is Complete and the Marginal Propensity

question 261

Multiple Choice

If the crowding-out effect is complete and the marginal propensity to save is 0.25, then an increase in government spending of $100 billion will generate how much more real GDP?

• A)$0
• B)$25 billion
• C)$100 billion
• D)$400 billion

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Definitions:

Temporal Lobe

A region of the cerebral cortex responsible for processing auditory information, as well as being involved in memory and speech.

Frontal Lobe

Part of the cerebral cortex involved in decision making, problem-solving, control of purposeful behaviors, consciousness, and emotions.

Occipital Lobe

The region of the cerebral cortex at the back of the brain, responsible for processing visual information.

Temporal Lobe

A region of the cerebral cortex responsible for processing auditory information and is also involved in memory and speech.