Suppose That in an Economy with an MPC of

question 217

Multiple Choice

Suppose that in an economy with an MPC of .8 the government wanted to shift the aggregate demand curve leftward by $40 billion at each price level to remedy demand-pull inflation.It could:

• A)increase taxes by $10 billion.
• B)reduce government spending by $40 billion.
• C)reduce government spending by $5 billion.
• D)increase taxes by $20 billion.

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Definitions:

Need for Competence

The desire to interact effectively with the environment, to master tasks, and to achieve proficiency.

Need for Achievement

A psychological trait that drives an individual to pursue and attain goals.

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on any external pressure.

Need for Competence

An individual's innate desire to be effective in dealing with the environment, feeling capable, and skilled.