Assume that an economy's spending multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?
A. $500 billion spending cut.
B. $500 billion spending increase.
C. $125 billion spending cut.
D. $125 billion spending increase.
Answer: C
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The legal system based on common law derives from the experience of which country?
A) France B) England C) Germany D) Rome
A decrease in the money supply
a. lowers the interest rate, causing a decrease in investment and a decrease in GDP. b. lowers the interest rate, causing a decrease in investment and an increase in GDP. c. raises the interest rate, causing an increase in investment and a decrease in GDP. d. raises the interest rate, causing an increase in investment and an increase in GDP. e. raises the interest rate, causing a decrease in investment and a decrease in GDP.
A decrease in the price level
A) shifts the AD curve to the right.
B) shifts the AD curve to the left.
C) causes an upward movement along the existing AD curve.
D) causes a downward movement along the existing AD curve.
E) none of the above
When the economy experiences abnormally high unemployment,
A. The economy is producing on the production possibilities curve. B. There is government failure. C. There is macro instability. D. No market failure occurs.