Assume the Marginal Propensity to Consume Is 0

question 282

Multiple Choice

Assume the marginal propensity to consume is 0.8 and potential output is $800 billion. If actual real GDP is $700 billion, which of the following policies would bring the economy to potential output?

• A)Decrease taxes by $100 billion.
• B)Increase taxes by $100 billion.
• C)Decrease taxes by $25 billion.
• D)Decrease government transfers by $25 billion.

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Definitions:

Myofibrils

The basic rod-like unit of a muscle cell, composed of sarcomeres, which are responsible for the muscle's contractile properties.

Sarcomeres

The basic contractile units of muscle fiber, defined by the region between two Z lines, responsible for muscle contraction.

Acetylcholine Receptors

Protein receptors that respond to the neurotransmitter acetylcholine, playing crucial roles in muscle contraction and many autonomic nervous system functions.

Motor End Plate

The region of muscle fiber membrane that is directly beneath the terminal portion of a motor neuron, critical for neuromuscular transmission.