If Short-Run Equilibrium Output Equals 10,000, the Income-Expenditure Multiplier Equals

question 17

Multiple Choice

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 5, the mpc equals 0.8, and potential output (Y*) equals 9,000, then taxes must be ________ by approximately ________ to eliminate any output gap.

• A)decreased; 250
• B)decreased; 200
• C)increased; 250
• D)increased; 200

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Definitions:

Reinforcing

The process of increasing the likelihood of a behavior's occurrence by adding or removing a stimulus following the behavior.

Disruptive

Behavior that interrupts or disturbs the normal flow or operation of activities, often seen as undesirable in social and educational contexts.

Animal Subjects

Animals used in research or experiments in order to observe biological, psychological, or social processes that could provide insights relevant to humans or other animals.

Behavioral Laws

Fundamental principles or rules that explain and predict how organisms behave, often based on consequences of actions in terms of rewards and punishments.