If the MPC = 0.8, an increase in investment spending from $35 billion to $38 billion will increase real GDP by
A) $3 billion.
B) $3.75 billion.
C) $15 billion.
D) $24 billion.
C
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A consumption-based theory of the determination of the real interest rate is based on the assumption that: a. a rise in the real interest rate will increase current consumption
b. the real interest rate must adjust to make people willing to experience changing consumption levels over time. c. the real interest rate is determined by the supply and demand for investment and is therefore unaffected by consumption decisions. d. the real interest rate must be positive.
One of the main difficulties with implementing fiscal policy is:
A. the time lag between the time the policy is chosen and the time it gets enacted. B. deciding on a policy without all the relevant information. C. the danger in overshooting or undershooting the goal of full employment. D. All of these are true.
Which of the following holds true if a country is said to have a comparative advantage in the production of wheat?
a. The country can produce more wheat than any other nation. b. The opportunity cost of producing wheat is the lowest in the country. c. The price of wheat is the lowest in that country. d. Domestic wheat is of the best quality in the world. e. The country can produce only wheat.
Suppose that the inflation rate was 4 percent in 2002 and 3 percent in 2003 . This would mean that
a. the price level fell from 2002 to 2003 b. the price level fell at a faster rate in 2003 than in 2002 c. the price level rose at a faster rate in 2003 than in 2002 d. the price level rose at a slower rate in 2003 than in 2002 e. all prices in the economy rose at a rate of 3 percent in 2003