If Government Expenditures Increase by $20 Billion and Equilibrium GDP

question 135

Multiple Choice

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result, we can conclude that:

• A)the expenditures multiplier is 2.
• B)the MPC for this economy is .6.
• C)inflation is occurring.
• D)the MPS for this economy is .6.

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Definitions:

Framing

The way information is presented or structured, which can influence perception and decision-making.

Losses

The negative outcomes or reductions experienced in various contexts, such as finance, personal well-being, or competitions.

Gains

Increases or improvements, often referenced in contexts such as productivity, knowledge, or physical attributes.

Hindsight Bias

The inclination to see events as having been predictable after they have already occurred, often referred to as the "I-knew-it-all-along" phenomenon.