What is the multiplier effect and when do multiplier effects occur?
What will be an ideal response?
The multiplier effect is a series of induced increases (or decreases) in consumption spending that results from an initial increase (or decrease) in autonomous expenditures. The multiplier effect amplifies the effect of economic shocks on real GDP. Multiplier effects occur whenever there is a change in autonomous expenditures, which is spending that does not depend on income.
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Mr. James' company produces candy bars. Which is NOT a variable input for this firm?
A) Sugar B) Assembly line workers C) The big chocolate stirring machines D) Packaging materials
Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is TRUE?
A) If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will fall. B) If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase. C) If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will remain unchanged. D) The price of a ticket to a Lakers game will always equal the price of a ticket to a Lady Gaga concert.
Rents represent earnings that
a. exceed marginal cost b. are less than marginal revenue product c. are less than what producers would require to supply products d. exceed opportunity revenue e. exceed opportunity cost
When real GDP declines in a particular year, nominal GDP: a. will decline at a faster rate than real GDP if there is inflation. b. will decline at a slower rate than real GDP if there is inflation. c. may increase or decrease if there is inflation
d. will increase if there is deflation.