In the Short-Run Keynesian Model Where the Marginal Propensity to Consume

question 111

Multiple Choice

In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, taxes must be:

• A)increased by $1 billion.
• B)decreased by $1 billion.
• C)increased by $1.33 billion.
• D)decreased by $1.33 billion.

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Definitions:

Alignment

The act of adjusting or arranging elements in a straight line or in correct relative positions; in a social context, it refers to the process of aligning one's behavior or attitudes with those of a group or another individual.

Ideal Self

The representation of the attributes one aspires to have, reflecting personal goals and standards of perfection.

Ought Self

The Ought Self is a component of self-discrepancy theory that represents the attributes a person believes they should possess, often influenced by societal expectations or personal obligations.

Working Self-concept

The subset of an individual's self-knowledge that is brought to mind in a particular context, influencing behavior and self-presentation in that situation.