Suppose President Obama Is Successful in Passing a $10 Billion

question 45

Multiple Choice

Suppose President Obama is successful in passing a $10 billion tax increase.Assume that taxes are fixed,the economy is closed,and the marginal propensity to consume is 0.8.What happens to equilibrium GDP?

• A)There is a $50 billion increase in equilibrium GDP.
• B)There is a $50 billion decrease in equilibrium GDP.
• C)There is a $40 billion increase in equilibrium GDP.
• D)There is a $40 billion decrease in equilibrium GDP.

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Definitions:

Psychopharmacology

The study of the effects of drugs on the mind and behavior.

Transcranial Direct Current Stimulation

A method of stimulating the brain that involves applying a steady, low-level direct current through electrodes placed on the scalp to alter brain cell activity.

Electroconvulsive Therapy

A psychiatric treatment involving electrically induced seizures to provide relief from mental disorders.

Lithium

Lithium is a chemical element used as a medication to treat bipolar disorder and manage mood swings by stabilizing brain chemicals.