If government increases its purchases by $15 billion and the MPC is 2/3, then we would expect the equilibrium GDP to:
A. increase by $30 billion.
B. increase by $45 billion.
C. decrease by $35 billion.
D. increase by $50 billion.
B. increase by $45 billion.
You might also like to view...
Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?
A) because the slower-growing countries save too much B) because the annual growth rate is compounded over time C) because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain D) because the slower-growing countries don't export enough
Refer to Figure 2.1. What is the opportunity cost of increasing production of manufactured products from 500 tons to 600 tons per year?
A) 200 tons of agricultural products per year B) 400 tons of agricultural products per year C) 500 tons of agricultural products per year D) 600 tons of agricultural products per year
When the Fed increases the money supply
A) the interest rate rises and this stimulates consumption spending. B) the interest rate falls and this stimulates investment spending. C) the interest rate rises and this stimulates investment spending. D) people spend less because they have more money.
In general, as productivity levels increase, the potential for productivity growth
a. decreases. b. increases. c. remains the same. d. increases if GDP increases.