In the third quarter of 2008, investment in the US totaled $1.4 trillion and in 2007, investment was $1.3 trillion. In addition, third quarter real GDP was $11 trillion. Suppose the MPC in the US is 0.8. ignoring the effects of imports and taxes, the multiplier is __________ and the change in investment will decrease equilibrium expenditure by __________.
a) 2; $1 trillion
b) 5; $1 trillion
c) 2; $200 million
d) 5; $500 million
d) 5; $500 million
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The short-run Phillips curve will shift if there is
A) a change in inflation expectations. B) an increase in inflation that is unanticipated. C) an increase in the unemployment rate. D) a decrease in inflation that is unanticipated.
If the consumption function is given by C = 200 + 0.6YD, then an increase in taxes of 50 units will cause the IS schedule to
a. shift to the right by 75 units.. b. shift to the left by 50 units. c. shift to the left by 75 units. d. shift to the left by 125.
What are cover and commodity charges?
If tastes for a good increased and the price of a substitute good decreased at the same time, as a result: a. prices would rise
b. prices would fall. c. larger quantities to be exchanged. d. we would not know which direction either prices or quantities exchanged would be altered without more information.