Suppose the Marginal Propensity to Consume Is 0

question 258

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 $400 billion.

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Definitions:

Export

The process of sending goods or services produced in one country to another country for sale or trade.

Import

Products or services that are transported into a country from another with the intent to sell them.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, leading to more efficient trade and resource allocation.

Opportunity Cost

The value of the best alternative foregone as a result of making a particular choice or decision.