Assume That the Marginal Propensity to Consume in an Economy

question 3

Multiple Choice

Assume that the marginal propensity to consume in an economy is 0.9. If the economy's full-employment real GDP is $500 billion and its equilibrium real GDP is $550 billion, there is an inflationary expenditure gap of:

• A) $5 billion
• B) $50 billion
• C) $100 billion
• D) $500 billion

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Definitions:

Pressure Switch

A switch activated at a specified pressure.

Hardwired Relay Control

A control system that uses physical electrical connections and relays for controlling machinery or processes.

Energized

Describes an electrical circuit or component that is active and under power, thereby capable of performing its intended function.

Electromagnet Control Relay

A relay device that uses an electromagnet to mechanically operate a switch, allowing lower power signals to control much larger power circuits.