If the Economy Is Initially Suffering from a Recessionary Gap

question 37

Multiple Choice

If the economy is initially suffering from a recessionary gap equal to 50 units and the marginal propensity to consume is 0.9,then the income-expenditure multiplier is equal to _________,so if net exports rise by _________ units,the economy will return to potential output.

• A) 0.9;56
• B) 9;50
• C) 9;5
• D) 10;50
• E) 10;5

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Definitions:

Hunger Signals

Biological cues sent by the body to indicate the need for food intake.

Set Point

A theory suggesting that the body regulates its weight and body fat level with internal mechanisms, aiming to keep body weight at a predetermined, stable level.

Basal Metabolic Rate

The velocity at which the body expends energy in a resting state to keep up primary functions, including breathing and staying warm.

Metabolic Rate

Metabolic Rate is the rate at which the body consumes energy, measured in calories, reflecting the speed of bodily processes and functions.