Suppose That in an Economy with a MPC of

question 96

Multiple Choice

Suppose that in an economy with a MPC of .5 the government wanted to shift the aggregate demand curve rightward by $80 billion at each price level to expand real GDP.It could:

• A)reduce taxes by $160 billion.
• B)increase government spending by $80 billion.
• C)reduce taxes by $40 billion.
• D)increase government spending by $40 billion.

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Definitions:

Social Comparison Theory

The concept where people assess their own value in society and personally by comparing themselves to others who they believe are either doing better or worse.

Objective Standards

Criteria or benchmarks that are based on measurable and unbiased facts or principles.

Social Standards

Norms and expectations about how people should behave in society, which guide individuals' actions and interactions.

Stereotype Threat

The risk of confirming negative stereotypes about an individual's racial, gender, or cultural group.