Assuming That the Government Can Act Immediately Before the Multiplier

question 113

Multiple Choice

Assuming that the government can act immediately before the multiplier takes effect, then to offset an increase in investment by $1 billion, 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:

Fixed Action Patterns

Instinctive behavioral sequences that are relatively invariant within the species and are triggered by specific stimuli.

Innate

Traits, abilities, or behaviors that are inherent and present at birth, not acquired through learning.

Key Stimulus

A specific environmental cue that triggers a fixed action pattern in an animal.

Fixed Action Pattern

A sequence of unlearned acts directly linked to a specific stimulus, which is virtually inevitable and once begun, is carried to completion.