An Aide to a U

question 109

Multiple Choice

An aide to a U.S.Congressman computes the effect on aggregate demand of a $20 billion tax cut.The actual increase in aggregate demand is less than the aide expected.Which of the following errors in the aide's computation would be consistent with an overestimation of the impact on aggregate demand?

• A)The actual MPC was larger than the MPC the aide used to compute the multiplier.
• B)The aide thought the tax cut would be permanent,but the actual tax cut was temporary.
• C)The increase in income shifted money demand less than the aide had anticipated.
• D)The increase in income resulted in investment rising more than the aide had anticipated.

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Definitions:

Openness

One of the Big Five personality traits, reflecting a person's level of creativity, curiosity, and openness to new experiences and ideas.

Relaxing Music

Music specifically composed or selected to help reduce stress and induce a state of relaxation in the listener.

Folk Singers

Musicians who specialize in singing folk music, a genre that often encompasses traditional music passed through generations, frequently embodying the cultural or social issues of their time.

Extraversion

A personality trait characterized by outgoingness, high energy, and a preference for social interaction and external stimulation.