If Government Decreases Its Purchases by $20 Billion and the MPC

question 37

True/False

If government decreases its purchases by $20 billion and the MPC is .8,equilibrium GDP will decrease by $100 billion.

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Definitions:

Five-Month Moving Average

A forecasting method that calculates the average of data points (such as sales or temperatures) over five consecutive months to identify trends.

Past Data Points

Historical information or measurements that are used for analysis or to predict future trends.

Exponential Smoothing

A time series forecasting method for univariate data that applies decreasing weights to past observations.

Actual Demand

The real or observed demand for products or services in a market, as opposed to forecasted or theoretical demand.