Suppose That the Federal Government Allocates $5 Billion to an "Energy-Efficient

question 106

Multiple Choice

Suppose that the federal government allocates $5 billion to an "energy-efficient appliance rebate" program.It also raises taxes by $5 billion to keep the deficit from growing.If the marginal propensity to consume is 0.8, what is the effect on equilibrium GDP?

• A)GDP does not change.
• B)GDP increases by $25 billion.
• C)GDP increases by $4 billion.
• D)GDP increases by $5 billion.
• E)GDP increases by $2.5 billion.

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Definitions:

Procedural Memory

A type of long-term memory responsible for knowing how to perform different actions and skills.

Nondeclarative Memory

A type of long-term memory for skills, procedures, and conditioned responses that can be performed without conscious awareness.

Memory-Blocking Drug

A hypothetical or experimental substance that can prevent the formation of new memories or impair the retrieval of existing ones.

Sensory Memory

The shortest-term element of memory, which is the ability to retain impressions of sensory information after the original stimuli have ended.