Suppose that the government spends more on a missile defense program. What does this do to aggregate demand? How is your answer affected by the presence of the multiplier, crowding-out, taxes, and investment-accelerator effects?
The increase in expenditures means that government spending rises. The aggregate demand curve shifts to the right. Aggregate demand shifts farther if there is a multiplier effect or an investment accelerator and shifts less if there is crowding out or if taxes are raised to increase government expenditures.
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Real GDP per capita is found by
A. dividing population by real GDP. B. subtracting population from real GDP. C. dividing real GDP by population. D. adding real GDP and population.
The production possibilities curve shows different combinations of goods that:
a. can be consumed by households. b. can be consumed by firms. c. can be produced with the available technology. d. are produced and consumed by firms. e. are bought and sold in the market.
At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United Gadgets is willing to supply 10,000 gadgets. If the price were to rise to $8 per unit, their respective quantities supplied would rise to 45,000 and 25,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets?
A. 0.80 B. 0.833 C. 1.0 D. 1.2
Which of the following is always true after an economy reaches a balanced growth equilibrium?
A) the growth rate of output equals the rate of depreciation B) population growth is zero C) the growth rate of capital is equal to the growth rate of the effective work force D) the growth rate of capital is equal to the savings rate E) none of the above