In the Basic Keynesian Model Where the Marginal Propensity to Consume

question 147

Multiple Choice

In the basic Keynesian model where the marginal propensity to consume is 0.5,transfer payments must be ________,to close an expansionary gap resulting from a $1 billion increase in autonomous consumption.

• A) increased by $1 billion
• B) decreased by $1 billion
• C) increased by $2 billion
• D) decreased by $2 billion
• E) increased by $0.5 billion

Interpret the law of comparative advantage and its implications for productivity and trade.

Analyze scenarios to determine individuals’ or countries’ comparative and absolute advantages.

Understand the concept of absolute and comparative advantage in economic transactions.

Distinguish between absolute advantage and comparative advantage.

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Definitions:

α

Denotes the level of significance in hypothesis testing, representing the probability of rejecting a true null hypothesis.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1.

Null Hypothesis

A default hypothesis in statistical inference that proposes no significant effect or relationship exists between variables.

Rejected

In statistical hypotheses testing, the term refers to the conclusion to not accept the null hypothesis based on the evidence provided by the data.