Suppose That Congress Allocates $1 Billion to Clean Up After

question 226

Multiple Choice

Suppose that Congress allocates $1 billion to clean up after hurricanes in 2018.It also raises taxes by $1 billion to keep the deficit from growing.If the marginal propensity to consume is 0.9,what is the effect on equilibrium GDP?

• A)GDP does not change.
• B)GDP increases by $10 billion.
• C)GDP increases by $900,000.
• D)GDP increases by $1 billion.

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Definitions:

Economic Independence

The state of having sufficient personal wealth to live, without having to depend on income from some form of employment.

Genuine Freedom

The authentic state of being free from undue or oppressive restrictions imposed by authority on one's way of life, behavior, or political views.

Market Revolution

A period of rapid economic change in the United States during the 19th century, marked by the expansion of capitalism, the development of infrastructure, and the increase of labor and consumer markets.

American Protestants

Members of Protestant denominations in the United States, characterized by their diversity in beliefs and practices, but unified in their separation from the Catholic Church.