The primary reason why the oversimplified formula overstates the multiplier is that it ignores price-level changes, which reduce the multiplier

a. True
b. False
Indicate whether the statement is true or false


False

Economics

You might also like to view...

An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.

A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease

Economics

Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and $500 for electricity. Her total variable costs for the month are:

a. c and e. b. $4,000. c. $32 per dress. d. $7,500. e. $8,000.

Economics

Given a linear supply function of the form QXS = -10 + 5PX, find the inverse linear supply function.

A. PX = -10 + 0.2QX. B. PX = -10 + 5QX. C. PX = 2 + 0.2QX. D. PX = 2 + 5QX.

Economics

Exhibit 3-6 Milk market            Price per Quart Quantity Demanded (Quarts per week) Quantity Supplied (Quarts per week) 0.70 20 180 0.60 60 140 0.50 100 100 0.40 140 60 0.30 180 20 In Exhibit 3-6, which of the following is true about the milk market? ?

A. At price 0.60 there is an excess demand of milk. B. At price 0.40 there is an excess supply of milk. C. At price 0.70 there is an excess supply of milk. D. At price 0.50 there is an excess demand of milk.

Economics