Assume That the Marginal Propensity to Consume in an Economy

question 133

Multiple Choice

Assume that the marginal propensity to consume in an economy is 0.75. If the economy's full-employment real GDP is $900 billion and its equilibrium real GDP is $800 billion, there is a recessionary expenditure gap of:

• A) $25 billion
• B) $100 billion
• C) $133 billion
• D) $400 billion

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Definitions:

International Trade Agreement

A treaty or accord between countries that governs the rules and guidelines for trade between the signatories.

Supply Chain

The entire process of making and selling commercial goods, including raw material gathering, manufacture, distribution, and sale.

Target Markets

Specific groups of potential customers towards which a business directs its marketing efforts and products.

Marketing Concept

A management orientation that focuses on identifying and meeting the needs and desires of consumers.