If Policy Makers Want to Increase Real GDP by $100

question 119

Multiple Choice

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

• A)decrease; more than $25 billion
• B)decrease; less than $25 billion
• C)increase; more than $25 billion
• D)increase; less than $25 billion

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Definitions:

Abbreviation

A simplified version of a word or phrase.

Iron

A chemical element with symbol Fe, known for its strength and magnetic properties, essential in hemoglobin for oxygen transport in the blood.

Blood

A vital fluid in the body that delivers necessary substances such as nutrients and oxygen to the cells and transports metabolic waste products away.

Fluid

A substance that has no fixed shape and yields easily to external pressure; a gas or (especially) a liquid.