Which statement about the multiplier is correct?
A. If a $20 billion increase in spending creates $20 billion of new income in the first round of
the multiplier process and $15 billion in the second round, the multiplier in the economy is
5
B. If a $40 billion increase in spending creates $40 billion of new income in the first round of
the multiplier process and $20 billion in the second round, the multiplier in the economy is
4
C. If a $60 billion increase in spending creates $60 billion of new income in the first round of
the multiplier process and $50 billion in the second round, the multiplier in the economy is
5
D. If an $80 billion increase in spending creates $80 billion of new income in the first round of
the multiplier process and $60 billion in the second round, the multiplier in the economy is
4
D. If an $80 billion increase in spending creates $80 billion of new income in the first round of the multiplier process and $60 billion in the second round, the multiplier in the economy is 4
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The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is
A) perfectly inelastic. B) inelastic. C) unitary elastic. D) elastic
Most of the U.S. national debt is owed to ____. Thus a rising national debt implies that there will be a future redistribution of income and wealth in favor of ____
a. foreigners; foreigners b. other U.S. citizens; bondholders c. foreigners; those needing government services d. other U.S. citizens; those needing government services
A horizontal demand curve is perfectly elastic because a change in price will induce an infinite change in quantity demanded
a. True b. False Indicate whether the statement is true or false
What branch of economics is concerned with interest rates and the gross domestic product (GDP) of the U.S. economy?
A) Normative economics B) Positive economics C) Microeconomics D) Macroeconomics