Refer to the accompanying figure.
Based on the figure, the income-expenditure multiplier in the economy illustrated equals:
A. 1,000
B. 0.75
C. 4,000
D. 4
Answer: D
You might also like to view...
Consider the market for ride-on lawn mowers and the recent increases in the price of oil. The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers. An increase in the price of oil also makes it more expensive to run a ride-on mower. If the price of oil increases, the demand for ride-on mowers will ________ and the supply will ________.
A. decrease; increase B. increase; decrease C. decrease; decrease D. increase; increase
The interest-rate-based monetary policy transmission mechanism argues that an increase in the money supply
A) has no effect on aggregate demand but reduces long-run aggregate supply. B) has no effect on aggregate demand but increases short-run aggregate supply. C) causes interest rates to fall, which causes an increase in planned investment, and an increase in aggregate demand. D) causes the inflation rate to decline, which causes an increase in household consumption spending and an increase in aggregate demand.
An airline can profit by offering standby customers an unsold seat at a substantial discount just before takeoff because
a. additional passengers are needed to balance the load. b. the marginal cost of additional passengers is very small. c. additional passengers add little to fixed costs. d. such passengers add more to profits than do those with reserved seats.
In an open economy, the government deficit is 400 and investment exceeds saving by 300, so in equilibrium the trade deficit (IM? X) must be
A. 100 B. 200 C. 300 D. 700