Consider a Closed Economy Described by AE (Aggregate Expenditures)= 800

question 90

Multiple Choice

Consider a closed economy described by AE (aggregate expenditures) = 800, 000 + 0.75Y Assume that this economy is initially in equilibrium.But now the government implements a program to improve highways that will cost $1 million.This implies that equilibrium real GDP will:

• A)decrease by $1 million.
• B)decrease by $4 million.
• C)increase by $1 million.
• D)increase by $4 million.
• E)decrease by $800, 000.

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Definitions:

Surprise Value

The significance or impact of an unexpected event, which can greatly influence learning and memory processes.

Overshadowing

A phenomenon in classical conditioning where a more salient stimulus prevents the learning of a less salient one.

CS Preexposure Effect

A phenomenon in classical conditioning where prior exposure to the conditioned stimulus without the unconditioned stimulus can inhibit the formation of a conditioned response.

Potentiation

Potentiation refers to the increase in strength of nerve impulses along pathways that have been used previously, either short-term or long-term.