Assume There Is No Government or Foreign Sector

question 325

Multiple Choice

Assume there is no government or foreign sector. If the MPS is 0.2, a $40 billion decrease in planned investment will cause aggregate output to decrease by

• A) $20 billion.
• B) $50 billion.
• C) $80 billion.
• D) $200 billion.

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Definitions:

Reflection

The process of intentionally thinking about one's actions, experiences, beliefs, and values to gain insights or learning.

Expectancy-value Theory

A psychological theory that explains behavior as driven by the belief that one's effort will lead to desired outcomes and the value of those outcomes to the individual.

Goal

denotes an objective or desired outcome that a person or a system aims to achieve.

Effort

The amount of physical or mental energy expended to achieve a goal or perform a task.