Use the following table to answer the next question. Gross Investment$172 billionNet Foreign Income$18 billionIndirect Business Taxes$15 billionRent Net Exports-$96 billionDepreciation (Capital Consumption)$145 billionGovernment Purchases$188 billionWages$763 billionProfits and Losses$90 billionConsumption$895 billionInterest$74 billionWhat is the value of rent?
A. $1,141 billion
B. $54 billion
C. $2,264 billion
D. $90 billion
Answer: B
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Because it is based on the demand for products, the demand for labor is called
a. a substitution demand b. a complementary demand c. an income demand d. a derived demand e. a marginal demand
The long run result of the government responding to a negative supply side shock with increased spending will be a:
A. faster recovery, but it will cause even greater inflation. B. slower recovery, if they misjudge their own spending. C. faster recovery at a lower price level than allowing short-run aggregate supply to adjust on its own. D. slower recovery, but it will cause inflation to be lower than if they did nothing.
The multiplier effect occurs when:
A. spending by one person generates income for others and causes others to spend more too, increasing the impact of the initial spending on the economy. B. the level of consumer confidence increases more than predicted given a tax cut. C. increased spending by one or more individuals causes others to react and increase their savings. D. None of these is true.
Economic models
a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if they are to be useful. d. can be useful, even if they are not particularly realistic.