Refer to the information provided in Table 24.8 below to answer the question(s) that follow.Table 24.8All Figures in Billions of DollarsOutput (Income)Net TaxesConsumption Spending (C = 100 + 0.9Yd)SavingsPlannedInvestment PurchasesGovernment Spending2,6001002,3501501502002,8001002,5301701502003,0001002,7101901502003,2001002,8902101502003,4001003,0702301502003,6001003,2502501502003,8001003,430270150200Refer to Table 24.8. The economy is at the equilibrium level of output. If government spending increases by $200 billion, the new equilibrium level of output is
A. $5,600 billion.
B. $4,600 billion.
C. $4,400 billion.
D. $4,000 billion.
Answer: A
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The multiplier effect following an increase in expenditure is generated by induced increases in consumption expenditure as income rises
Indicate whether the statement is true or false
A nominal anchor promotes price stability by
A) outlawing inflation. B) stabilizing interest rates. C) keeping inflation expectations low. D) keeping economic growth low.
The monetary policy strategy that relies on a stable money-income relationship is
A) exchange-rate targeting. B) monetary targeting. C) inflation targeting. D) the implicit nominal anchor.
Which of the following is likely to be most capital-intensive?
A. Production of clothing in rural China. B. Farming in developing countries. C. Oil refining in the United States. D. None of the choices are correct.