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

question 111

Multiple Choice

In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, taxes must be:

• A)increased by $1 billion.
• B)decreased by $1 billion.
• C)increased by $1.33 billion.
• D)decreased by $1.33 billion.

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Definitions:

Retrograde Amnesia

A loss of memory-access to events that occurred or information that was learned before an injury or the onset of a disease.

Anterograde Amnesia

A condition characterized by the inability to form new memories following the onset of the condition.

Graduated Amnesia

A hypothetical or not commonly used term that may refer to the progressive loss of memory.

Suggestibility

The quality of being inclined to accept and act on the suggestions of others, often studied in the context of memory and eye-witness testimony.