Assume That the Marginal Propensity to Consume Is 0

question 158

Multiple Choice

Assume that the marginal propensity to consume is 0.8 and potential output is $800 billion. If GDP is $850 billion:

• A)there is an inflationary gap.
• B)there is a recessionary gap.
• C)the economy is in long-run equilibrium.
• D)taxes should be decreased.

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Definitions:

Otoscopic Examination

A visual examination of the ear canal and eardrum using an otoscope to detect abnormalities or infections.

Tympanic Membrane

A thin, cone-shaped membrane that separates the external ear from the middle ear and vibrates in response to sound waves, also known as the eardrum.

Pearly Gray

A description often used for objects or surfaces that have a soft, shiny gray appearance similar to that of pearls.

Vital Signs

Measurements of the body's most basic functions, including temperature, heart rate, blood pressure, and respiratory rate.