Suppose That the Government Allocates $1 Billion for New Roads

question 54

Multiple Choice

Suppose that the government allocates $1 billion for new roads.It also raises taxes by $1 billion to keep the deficit from growing.If the marginal propensity to consume = 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.

---

Definitions:

Relative Deprivation

A sociological concept referring to the discontent people feel when they compare their positions to those of others and realize that they have less than their peers.

Protest Politics

A form of political participation that involves citizens taking to the streets or engaging in other forms of public demonstration to express opposition to policies, laws, or government actions.

Effective Mass Movement

A collective effort by a large group of people aimed at promoting or resisting social, political, or environmental change, characterized by its impact and organization.

Protest Politics

A form of political participation that involves individuals or groups demonstrating or rallying against certain policies, actions, or decisions by those in power.