Suppose That Real GDP Is Initially $13 Trillion and the Government

question 89

Multiple Choice

Suppose that real GDP is initially $13 trillion and the government attempts to increase real GDP to $14 trillion. The marginal propensity to consume is 0.75, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. How much increase in real government spending could lead to the desired level of real GDP?

• A)$200 billion
• B)$250 billion
• C)$500 billion
• D)$1 trillion

---

Definitions:

Stigma

A mark of disgrace associated with a particular circumstance, quality, or person, often leading to discrimination or negative perceptions.

Mental Health Issues

Challenges related to the emotional, psychological, and social well-being of an individual, affecting how they think, feel, and act.

Refusal

The act of declining or rejecting an offer, request, or command.

Severe Disabilities

Conditions that significantly impair one's physical, intellectual, or emotional functionality, often requiring extensive support in daily life.