Exports decrease by $500 billion, investment increases by $300 billion, and government expenditure increases by $200 billion. As a result, autonomous expenditures ________ , total expenditures ________ , and equilibrium real GDP ________
A) increases by $3500 billion; increases; increases by more than $300 billion
B) decreases by $200 billion; decreases; decreases by more than $200 billion
C) increases by $500 billion; increases; increases by more than $500 billion
D) decreases by $300 billion; decreases; decreases by more than $300 billion
E) is unchanged; is unchanged; is unchanged
E
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A sterilized central bank intervention does not affect the domestic money supply
Indicate whether the statement is true or false
Everything else held constant, a decrease in government spending ________ aggregate ________
A) increases; demand B) decreases; demand C) decreases; supply D) increases; supply
Which of the following best illustrates the use of discretionary countercyclical fiscal policy?
a. Congress provides $90 billion in relief aid for hurricane victims. b. Congress appropriates $50 billion to help the needy, and the appropriation is financed by a tax on wealth. c. Income tax receipts are smaller because of a decline in real GDP during a recession. d. Congress passes a bill authorizing $100 billion in additional spending when it receives news of a deepening recession.
If a nation has flexible exchange rates and its current and capital accounts equal zero, then the:
a. Financial account must be positive b. Financial account can be positive or negative depending on the size of the budget deficit and exchange rate. c. Reserves account can be positive or negative depending on the size of the budget deficit and exchange rate. d. Financial account minus the reserves account must equal zero.