Consider Two Economies,A and B

question 55

Multiple Choice

Consider two economies,A and B.Economy A has a marginal propensity to consume of 0.9,a net tax rate of 0.3 and a marginal propensity to import of 0.3.Economy B has a marginal propensity to consume of 0.9,a net tax rate of 0.1 and a marginal propensity to import of 0.3.Suppose there is an increase in autonomous investment of $5 billion in each of these economies.Which of the following statements is true?

• A)There is a larger decrease in real GDP in Economy B as a result of the change in autonomous investment.
• B)There is a larger decrease in real GDP in Economy A as a result of the change in autonomous investment.
• C)There is a larger increase in real GDP in Economy B as a result of the change in autonomous investment.
• D)There is a larger increase in real GDP in Economy A as a result of the change in autonomous investment.
• E)There is an equal effect on real GDP in Economies A and B as a result of the increase in autonomous investment.

---

Definitions:

Positive Reinforcer

An incentive that, when applied following an action, heightens the probability of the action being repeated.

Negative Reinforcer

An unpleasant stimulus whose removal leads to an increase in the probability that a preceding response will be repeated in the future.

Immediate Reinforcer

refers to a reward that occurs directly after a behavior, enhancing the likelihood of that behavior occurring again in the future.

Latent Learning

Learning that occurs without immediate reinforcement and is not demonstrated until there is an incentive to perform.