In the Short-Run Keynesian Model Where the Marginal Propensity to Consume

question 77

Multiple Choice

In the short-run Keynesian model where the marginal propensity to consume is 0.5, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, government purchases must be:

• A)increased by $1 billion.
• B)decreased by $1 billion.
• C)decreased by $0.5 billion.
• D)decreased by $2 billion.

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Definitions:

Poorest Quintile

The segment of the population that falls into the bottom 20% in terms of income or wealth, often used in statistical analyses of economic inequality.

Genetically Program

The process of determining or influencing the traits of an organism by modifying its genetic material.

Fetal Development

The process of growth and maturation of a fetus inside the uterus from conception to birth.

Increased Inequality

A situation where the economic gap between individuals or groups within a society widens, leading to a larger disparity in wealth and income.