If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $15 billion increase in government expenditures would shift the aggregate demand curve right by
a. $60 billion, but the effect would be larger if there were an investment accelerator.
b. $60 billion, but the effect would be smaller if there were an investment accelerator.
c. $45 billion, but the effect would be larger if there were an investment accelerator.
d. $45 billion, but the effect would be smaller if there were an investment accelerator.
a
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following is assumed constant along the demand curve for gasoline?
a. the price of gasoline and the prices of related goods b. the price of gasoline, buyers' incomes, and tastes c. all variables affecting demand other than the price of gasoline d. all variables affecting demand other than the supply of gasoline e. buyers' incomes and tastes, but not the prices of related goods
If a good is normal, then the Engel curve:
A. slopes upward. B. slopes downward. C. is vertical. D. is horizontal.
An investor deposits $400 into a bank account that earns an annual interest rate of 8%. Based on this information, how much interest will he earn during the second year alone?
A. $25.60 B. $64 C. $34.56 D. $32