Suppose Lower Interest Rates Suddenly Lead to an Injection of $325

question 107

Multiple Choice

Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Complete Table 10.1 by calculating the spending cycles as the increased investment spending works its way through the economy. $\begin{array}{lll} & \text { Change in this Cycle's } & \text { Cumulative Increase in } \\\text { Spending Cvcles } & \text { Spending and Income } & \text { Spending and Income }\\\hline\text { First-cycle spending }&\$325&\$325\\\text { Second-cvele spending }&\_\_\_&\_\_\_\\\text { Third-cycle spending }&\_\_\_&\_\_\_\end{array}$

$\text { Table } 10.1$ In Table 10.1,what is the change in the third cycle of spending resulting from the higher initial investment?

• A)$50.
• B)$208.
• C)$325.
• D)$585.

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Definitions:

Limbic System

A complex system of nerves and networks in the brain, involving several areas near the edge of the cortex concerned with instinct and mood. It regulates basic emotions and drives.

Somatosensory Area

A region of the cerebral cortex involved in processing sensory information from the body, including touch, temperature, and pain.

Stroke

A medical condition where poor blood flow to the brain results in cell death, leading to potential physical and cognitive impairments.

Sensitivity

Sensitivity is the ability to perceive and respond to changes in the environment or stimuli.