Suppose consumer confidence declines and as a result, consumer spending decreases by $4 billion dollars
Other things equal, if households spend $0.75 of each extra dollar of income and save the remaining $0.25, by how much will spending decrease during the third round through the circular flow?
A) $1 billion
B) $2.25 billion
C) $3 billion
D) $4 billion
B
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What are the three factors that define a household budget constraint. Explain
What will be an ideal response?
In the Great Depression of the 1930s, the unemployment rate in the U.S. climbed to what percentage?
A) 5 B) 10 C) 15 D) 20 E) 25
In the simple liquidity preference model, if the money demand curve is elastic, then:
A. small changes to the money supply will cause large changes to the interest rate. B. only large changes to the money supply will cause large changes to the interest rate. C. small changes to the money supply will cause insignificant changes to the interest rate. D. even large changes to the money supply will cause small changes to the interest rate.
What are menu costs?
A) the full list of a firm's costs of production B) the costs to a firm of changing prices C) the cost to a household of borrowing money when there is deflation D) the opportunity cost of dining in a restaurant instead of at home