The Marginal Propensity to Save Is 0

question 60

Multiple Choice

The marginal propensity to save is 0.2. Equilibrium GDP will decrease by $50 billion if aggregate expenditures schedule decrease by:

• A) $10 billion
• B) $15 billion
• C) $16 billion
• D) $40 billion

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Definitions:

Response Tendencies

Patterns of behavior or reactions that individuals are predisposed to in response to certain stimuli.

Reinforcements

In psychology, the process of encouraging or establishing a pattern of behavior by offering rewards or consequences.

Conditioned Response

A learned response to a previously neutral stimulus that becomes associated with an unconditioned stimulus.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without any need for prior learning.