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:

Brain

The complex central organ of the nervous system, located in the head, responsible for coordinating sensory information and directing motor functions; the site of consciousness, thoughts, memories, and emotions.

Emotions

Complex psychological states that involve three distinct components: a subjective experience, a physiological response, and a behavioral or expressive response.

Language

A system of symbols, sounds, and rules used for communication and the expression of ideas, thoughts, and emotions.

Myelin

The fatty substance coating axons that speeds the transmission of nerve impulses from neuron to neuron.