If the MPC is .75, then a $50 billion increase in investment would result in an increase in GDP of
A. $50 billion.
B. $75 billion.
C. $150 billion.
D. $200 billion.
D. $200 billion.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Which of the following types of economic regulation is most likely to encourage firms to inflate their costs?
A) price cap regulation B) rate of return regulation C) cartel regulation D) earnings sharing and price cap regulation
If Figure 4-8 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS0 to IS1, what is the initial level of real income and interest rate before these changes?
A) 3500; 7.5%. B) 4500; 12.5%. C) 5500; 7.5%. D) 4500; 2.5%.
Cyclical unemployment
a. is caused by changes in the business cycle. b. results from imperfect search activities in matching qualified employees with employers. c. results from institutional factors that make it difficult for some workers to find jobs. d. will probably go up as a result of improvements in online job searching.