The spending multiplier tells us the:
A. amount by which spending increases when GDP increases by $1.
B. fraction of each dollar that will decreases GDP of each dollar spent.
C. amount by which GDP decreases when spending on capital goods increases by $1.
D. amount by which GDP increases when spending increases by $1.
Answer: D
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Expansionary policy only leads to inflation, but does not raise output in ________
A) traditional Keynesian theory B) new Keynesian theory C) real business cycle theory D) traditional Keynesian, new Keynesian and real business cycle theory
Which of the following assets is most liquid?
a. short-term government bonds b. savings accounts c. checking accounts d. currency and coins
Draw a graph showing the effects of imposing a tariff in the small country case. Describe the results, using the concepts of producer surplus, consumer surplus and deadweight loss. Specifically address the effects on consumers, producers, government revenue and overall national well-being, connecting those effects to areas of your graph
What will be an ideal response?
A government may be able to reduce the international value of its currency by:
A. selling its currency in the foreign exchange market. B. buying its currency in the foreign exchange market. C. selling foreign currencies in the foreign exchange market. D. increasing its domestic interest rates.