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:

Information Retrieval

Information retrieval is the process of obtaining relevant information from a collection of resources, such as databases or the internet, based on specific queries or criteria.

Projection

Assigns personal attributes to other individuals.

Select

The process of choosing or making a decision when faced with two or more possibilities.

Organize

refers to arranging or structuring people, resources, or tasks systematically to achieve specific goals or outcomes efficiently.