In a Private Closed Economy Where MPC = 0

question 106

Multiple Choice

In a private closed economy where MPC = 0.8, if consumers reduce their spending by $10 billion and firms cut investments by $5 billion, then equilibrium GDP will decrease by:

• A) $75 billion
• B) $25 billion
• C) $18.8 billion
• D) $15 billion

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Definitions:

Humanistic Approach

A psychological perspective emphasizing empathy and stresses the good in human behavior, focusing on self-actualization and personal growth.

Free Will

The ability to make choices that are not predestined by past events, genetics, or environmental influences, highlighting human autonomy.

Poorly Defined

Refers to concepts, terms, or ideas that are not clearly elaborated or explained, making their understanding vague or incomplete.

Rogers

A reference to Carl Rogers, a prominent psychologist known for his contributions to humanistic psychology and the concept of person-centered therapy.