Refer to the accompanying figure.
Based on the figure, if autonomous spending falls from 400 to 200, then the new short-run equilibrium output will equal:
A. 800.
B. 1,200.
C. 400.
D. 600.
Answer: C
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An increase in the equilibrium quantity of a product will result
A) when there is an decrease in demand and a decrease in the cost of inputs used to make the product. B) when there is an increase in supply and an increase in demand for the product. C) when the quantity of the product supplied exceeds the quantity demanded. D) when there is an increase in supply and a decrease in demand for the product.
Other things being equal, during a period when the federal government issues more Treasury securities to borrow funds
A) the flow of government expenditures during that period must exceed the flow of tax revenues. B) the flow of government expenditures during that period must exceed the stock of tax collections. C) the stock of government deficit spending during that period must exceed the flow of tax revenues. D) the stock of government deficit spending during that period must exceed the stock of tax collections.
Suppose that the price of compact disks (CDs) increases, other things equal. Which of the following in the most likely effect in the market for DVDs?
a. a decrease in demand for DVDs b. an increase in demand for DVDs c. an increase in quantity demanded of DVDs d. a decrease in quantity demanded of DVDs e. a decrease in the quantity supplied of DVDs
If the MPC changed from 0.8 to 0.6, then the spending multiplier would change from a. 5 to 2.5
b. 2.5 to 5. c. 0.8 to 0.6. d. 8 to 6.