The principle of voluntary exchange is the concept that a voluntary exchange between two people makes both people better off.
Indicate whether the statement is true or false
Question 2
Suppose government spending decreases by 100 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)
A) increase in equilibrium real GDP equal to 500 billion.
B) increase in equilibrium real GDP equal to 800 billion.
C) decrease in equilibrium real GDP equal to 800 billion.
D) decrease in equilibrium real GDP equal to 500 billion.
Concept Care Map
People riding bikes in Netherlands
This image captures a protest of people who want the privilege of “naming” themselves.
Overload Principle
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