Suppose That Congress Allocates $1 Billion to Clean Up After

question 84

Multiple Choice

Suppose that Congress allocates $1 billion to clean up after the hurricanes of 2005.It also raises taxes by $1 billion to keep the deficit from growing.If the marginal propensity to consume is 0.9,what is the effect on equilibrium GDP?

• A)GDP does not change.
• B)GDP increases by $10 billion.
• C)GDP increases by $900,000.
• D)GDP increases by $1 billion.

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Definitions:

Schizophrenia

A complex, long-term mental disorder characterized by abnormal social behavior and difficulty in distinguishing between reality and imagination.

Anorexia Nervosa

A psychological and potentially life-threatening eating disorder characterized by an extremely low body weight and a distorted perception of weight or fear of gaining weight.

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual published by the American Psychiatric Association that classifies mental disorders.

Medical Model Bias

The tendency to view mental health issues and behaviors solely through the lens of biological factors or illnesses, often overlooking social, psychological, and environmental influences.