Suppose the Marginal Propensity to Consume Is 0

question 50

True/False

Suppose the marginal propensity to consume is 0.8.If the government cut taxes by $100 billion,then real GDP would increase by $500 billion.

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Definitions:

Durbin-Watson Statistic

A statistical measure employed to identify if there is autocorrelation at the first lag within the residual values following a regression analysis.

Positive Autocorrelation

A situation in which the errors in a regression model are positively correlated, meaning that a positive error in one period is likely to be followed by a positive error in the next.

Multicollinearity

A situation in regression analysis where independent variables are highly correlated, making it difficult to estimate individual regression coefficients accurately.

Regression Coefficients

Regression coefficients are values that quantify the relationship between independent variables and a dependent variable in regression analysis.