An Aide to a U

question 109

Multiple Choice

An aide to a U.S.Congressman computes the effect on aggregate demand of a $20 billion tax cut.The actual increase in aggregate demand is less than the aide expected.Which of the following errors in the aide's computation would be consistent with an overestimation of the impact on aggregate demand?

• A)The actual MPC was larger than the MPC the aide used to compute the multiplier.
• B)The aide thought the tax cut would be permanent,but the actual tax cut was temporary.
• C)The increase in income shifted money demand less than the aide had anticipated.
• D)The increase in income resulted in investment rising more than the aide had anticipated.

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Definitions:

Propinquity

A concept in social psychology referring to the physical or psychological proximity between people, which can affect their likelihood of forming relationships.

Propinquity

The state of being close to someone or something; proximity; it often influences personal relationships and social interactions.

Endogamy

Marriage to someone within one’s social group.

Exogamy

Marriage to someone from a different social group.