If the spending multiplier equals 6 and equilibrium real GDP is $32 billion below potential real GDP, then total planned expenditures need to decrease by approximately $5.33 billion to close the recessionary gap
a. True
b. False
Indicate whether the statement is true or false
False
You might also like to view...
If India decides to enact environmental laws to reduce air pollution, what would be the effect on GDP?
A) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. B) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP. C) GDP would increase as the citizens of India were made happier as the air pollution was reduced. D) GDP would increase reflecting the fact that the air would be cleaner.
A negative externality occurs when
A) there is rent-seeking. B) benefits are imposed on individuals that are not part of a transactions. C) there is creative destruction. D) costs are imposed on individuals that are not part of a transaction.
Refer to the figure. If price falls from $60 to $40, total revenue goes ________, so demand is ________.
Fill in the blank(s) with the appropriate word(s).
Suppose that, when the price of steel drops, steel companies tend to cut back on investment in their non-steel activities more than other firms in these same non-steel activities. This would support the idea that
A) cash flow matters for investment. B) cash flow does not matter for investment. C) business firms do not care about profit. D) business firms do not care about interest rates. E) business firms do not use discounting.