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.

Total marketing effort is a term used to describe the critical decision factors that affect demand: price, advertising, distribution, and product quality. define the variable x to represent total marketing effort. a typical model that is used to predict demand as a function of total marketing effort is based on the power function: d = axb suppose that a is a positive number. different model forms result from varying the constant b. sketch the graphs of this model for b = 0, b = 1, 0< b< 1, b< 0, and b> 1. (we encourage you to use excel to do this.) what does each model tell you about the relationship between demand and marketing effort? what assumptions are implied? are they reasonable? how would you go about selecting the appropriate model?