Consider a Simple Macro Model with a Constant Price Level

question 83

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________.

• A)the net taxes; the government purchases of goods and services
• B)the net taxes; its affect on disposable income
• C)the government purchases of goods and services; its effect on net exports
• D)the government purchases of goods and services; its effect on disposable income
• E)the government purchases of goods and services; its effect on investment

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Definitions:

Evaluation Apprehension

Concern that others are evaluating our behavior.

Social Pressure

The influence exerted by society or a group of people on an individual, encouraging conformity to certain behaviors, norms, or values.

Diffusion of Responsibility

A psychological phenomenon where people are less likely to take action or feel a sense of responsibility in the presence of a large group of people.