If the MPC is 0.75, the expenditure multiplier will be
A. 3.5.
B. 4.
C. 2.
D. 3.
Answer: B
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In the long run, an increase in the price level: a. increases output prices relative to input prices. b. increases the profit margins of many producers. c. increases RGDP supplied
d. Does none of the above.
Which one of the following is the largest component of the money supply (M1) in the United States?
A. checkable deposits B. gold certificates C. credit cards and traveler's checks D. Federal Reserve notes
According to the rational inattention theory, during the periods between informational updates
A. firms always change product prices more than the inflation rate. B. firms fail to fully adjust product prices. C. firms change the wages of their employees but keep product prices unchanged. D. firms fully adjust product prices.
Refer to the graph shown. An effective price ceiling at $3 causes consumer surplus to:
A. fall from 130 to 120. B. increase from 120 to 130. C. increase from 80 to 120. D. fall from 110 to 80.