The income-expenditure multiplier leads to greater than one-for-one changes in output when spending changes because:
A. multiple deposits are generated when new reserves are produced through fractional reserve banking.
B. the direct changes in spending change the income of producers which leads to additional changes in spending.
C. real output continues to adjust until it equals nominal output.
D. change the income of producers leads to additional tax revenue for the government, which will changes their level of spending.
Answer: B
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Which of the following is not a common effect of imposing a rent control?
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The entity that carries full responsibility for setting the overall direction of monetary policy and guiding the money supply is the:
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If there is an increase in market demand in a competitive price-taker market, then in the short run
a. there will be no change in the demand curves faced by individual firms in the market. b. the demand curves for firms will shift downward. c. the demand curves for firms will become more elastic. d. profits will rise.