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Assume the economy is in short-run equilibrium and there is less than full-employment output.Also assume that the marginal propensity to consume (MPC)is equal to 0.8.
a.What is the value of the government spending multiplier in this case?
b.Given the size of the multiplier,what would be the implied change in income (gross domestic product)from the stimulus spending of $500 billion?
Nonspecific-Action Tendencies
General predispositions to act in a certain way without a precise or direct motive.
Broaden-And-Build Tendencies
A theory suggesting that positive emotions expand an individual's attention and mindset, leading to increased creativity, problem-solving abilities, and personal growth.
Specific-Action Tendencies
Innate or learned behavioral responses triggered by specific environmental or internal stimuli aimed at achieving certain objectives or satisfying needs.
Subjective States
Individual experiences or perceptions that are influenced by personal feelings, tastes, or opinions.
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