In Country Z, the Government Simultaneously Increases Its Expenditures by $25

question 182

Multiple Choice

In Country Z, the government simultaneously increases its expenditures by $25 billion and increases taxes by $25 billion. If the MPS is equal to 0.2, the government's action ________ real GDP by ________.

• A)increases; $125 billion
• B)increases; $25 billion
• C)increases; $100 billion
• D)has no effect on; $0

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Definitions:

Weighted Mean

The mean of a data set that accounts for the importance or weight of each value.

Population Parameter

A numerical value that describes a characteristic of an entire population, such as its mean or standard deviation.

Sample Statistic

A numerical measure that describes some characteristic of a sample, such as the sample mean or sample standard deviation.

50th Percentile

Also known as the median, it is the value below which 50% of the observations in a group of data fall.