If Policy Makers Want to Increase Real GDP by $100

question 259

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 purchases of goods and services by $75 billion.

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Definitions:

Shortages

A market condition in which the demand for a product exceeds its supply, often leading to increased prices and wait times for the product.

Per Capita Consumption

The average consumption per individual in a certain area or population.

Commodity-Pricing Data

Information related to the price fluctuations and trends of goods that are traded, especially raw materials and agricultural products.

Real Commodity Prices

The prices of commodities adjusted for inflation, representing the true cost over time.