Suppose equilibrium income in an economy decreases by $600 as a result of a change in government spending. If the multiplier is 3, what is the change in government spending?
a. Government spending will decrease by $1,800.
b. Government spending will decrease by $600.
c. Government spending will decrease by $200.
d. Government spending will increase by $400.
e. Government spending will increase by $1,200.
c
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A recession occurs when real GDP decreases for at least 6 months
Indicate whether the statement is true or false
If prices of both horizontal and vertical goods increase by 50%,
A) budget constraint will be unchanged. B) slope of the budget constraint stay the same. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion.
Economists in the field of industrial organization study how
a. central banking policies affect financial markets. b. firms' demand for labor and individuals' supply of labor affect resource markets. c. firms' decisions about prices and quantities depend on market conditions. d. externalities and public goods affect the environment.
The biggest disadvantage of a fixed exchange rate is the
A) increased probability of high inflation. B) tradeoff between supporting the exchange rate and adjusting the trade balance. C) tradeoff between supporting the exchange rate and maintaining economic growth. D) tradeoff between supporting the exchange rate and maintaining a balanced budget.