Assume there are no taxes or imports. The government estimates that between 2012 and 2013 disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on this data, the multiplier equals:
a) 0.33
b) 0.7
c) 1.42
d) 3.33
d) 3.33
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Which of the following categories of federal spending is the largest in the United States?
A) interest on federal debt B) mandatory spending C) discretionary spending D) national defense
Employees at the hospital have negotiated a 3 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 5 percent over the next year, which of the following will occur?
A) Real wages for hospital employees will fall. B) The increase in inflation is expected. C) Inflation will be 3 percent the following year. D) Unemployment of hospital employees will rise.
When firms incur unplanned inventories, they typically
a. build new plants. b. call for more government spending. c. hire more workers and increase production. d. lay off workers and reduce production.
If government officials break up a natural monopoly into four smaller firms, then
a. each firm will be unable to maximize profits due to increased competition. b. competition will force firms to produce surplus output, which drives up price. c. the average cost of production will increase. d. consumers will benefit from lower average total costs.