If Policy Makers Want to Increase Real GDP by $100

question 309

True/False

If policy makers want to increase real GDP by $100 billion and the marginal propensity to consume is 0.75, they should increase government transfers by $75 billion.

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Definitions:

Baroreceptor Reflex

A reflex mechanism that helps maintain blood pressure stability by adjusting heart rate and blood vessel diameter in response to changes in blood pressure.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, a critical indicator of cardiovascular health.

Preload

The degree of stretch of cardiac muscle fibers at the end of diastole, affecting the force of contraction.

Cardiac Output

The volume of blood the heart pumps per minute, a critical measure of heart function and body's demand for oxygen.