If Policy Makers Want to Decrease Real GDP by $100

question 302

True/False

If policy makers want to decrease real GDP by $100 billion and the marginal propensity to consume is 0.6, they should decrease government purchases of goods and services by $40 billion.

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Definitions:

Consciousness Raising

An aspect of psychological and social interventions aimed at increasing individual awareness about a particular issue or aspect of self.

Psychoanalytic Theory

A theory developed by Freud that emphasizes unconscious processes and childhood experiences in shaping personality, behavior, and psychological problems.

Compromise Formation

A concept in psychoanalytic theory that refers to how the ego manages the conflict between the id, ego, and superego, resulting in a compromise that minimizes psychological discomfort.

Inner Conflicts

Psychological struggles within oneself, often arising from opposing desires, beliefs, or impulses.