Suppose the Government Finds It Can Increase Equilibrium Real GDP

question 39

Multiple Choice

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

• A)MPS in this economy is .4.
• B)MPC in this economy is .4.
• C)MPC in this economy is .3
• D)multiplier is 3.

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Definitions:

Extinction

In psychology, this refers to the slow reduction and eventual vanishing of a learned reaction when the previously associated conditioned stimulus is not combined with the unconditioned stimulus anymore.

Classical Conditioning

The process of learning by linking a naturally occurring stimulus with one introduced externally.

Conditioned Stimulus

A stimulus that initially has no effect but, when associated with an unconditioned stimulus, eventually triggers a conditioned response.

Fear of Snakes

An intense, irrational fear of snakes, also known as ophidiophobia.