Figure 12-3 -Refer to Figure 12-3.Suppose That Investment Spending Decreases by $5

question 284

Multiple Choice

Figure 12-3
-Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁.If the MPC is 0.8,then what is the change in GDP?

• A)-$4 million
• B)-$5 million
• C)-$25 million
• D)-$40 million

---

Definitions:

Freud

An Austrian neurologist named Sigmund Freud created psychoanalysis, a therapy approach for mental illnesses that involves discussions between a patient and a psychoanalyst.

Unconscious Mind

A part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Conscious Mind

The aspect of the mind that involves awareness of the self, the environment, and one's thoughts and experiences.

Latency Stage

A phase in Freud's psychosexual development theory occurring in childhood, where sexual urges are repressed, allowing for focus on social and intellectual growth.