If the Crowding-Out Effect Is Complete and the Marginal Propensity

question 261

Multiple Choice

If the crowding-out effect is complete and the marginal propensity to save is 0.25, then an increase in government spending of $100 billion will generate how much more real GDP?

• A)$0
• B)$25 billion
• C)$100 billion
• D)$400 billion

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Definitions:

Parent

An individual who has a biological or legal responsibility for raising and nurturing a child, providing care, protection, and guidance.

Corporal Punishment

A form of physical discipline that involves deliberately inflicting pain as retribution for an offense, or to enforce behavioral change.

Cultural Group

A community of people who share common cultural values, practices, beliefs, or heritage.

Disciplinary Style

The approach or methods used by parents, teachers, or authorities to manage behavior and enforce rules.