Suppose an initial increase in government expenditure increases output by $50,000. If the size of the multiplier was 1.0, the size of the initial increase in government expenditure was _____
Fill in the blank(s) with the appropriate word(s).
$12,500
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In long-run macroeconomic equilibrium, the
A) real wage rate has adjusted so that the economy is on the short-run aggregate supply curve but not on the long-run aggregate supply curve. B) long-run aggregate supply curve has shifted in response to a money wage rate increase so that potential GDP equals real GDP. C) aggregate demand curve adjusts to the point where the long-run aggregate supply curve and the short-run aggregate supply curve intersect. D) None of the above answers is correct.
The federal budget surplus recorded in 1998 resulted from a(n): a. decrease in taxes and rapid growth in federal outlays. b. increase in taxes and sluggish growth in federal outlays. c. decrease in taxes and a decrease in federal outlays
d. increase in federal outlays and taxes. e. increase in export earnings and decrease in import bills.
Which of the following is the most effective tool used by the Fed?
a. Converting state-chartered banks to nationally-chartered banks b. Shifting deposits from one District Fed to another c. Producing currency to increase the money supply d. Using the federal funds market e. Open market operations
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). c. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. The GDP Price Index and net nonreserve-related international borrowing/lending remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.