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Suppose That Real GDP Is Initially $14 Trillion and the Government

question 130

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Suppose that real GDP is initially $14 trillion and the government attempts to increase real GDP to $15 trillion. The marginal propensity to consume is 0.8, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. Which increase in government spending below could yield the desired level of real GDP?


Definitions:

Raw Materials

The basic materials from which products are made, often referring to natural resources like wood, oil, or metals before they are processed.

Persuasive Messages

Communications designed to influence or convince the audience towards a particular viewpoint or action.

Audience's Personalities

The collective characteristics, traits, and preferences that define the individuals who make up a particular audience.

Behavioral Economics

A field of study that examines the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

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