Assume that the marginal propensity to consume in an economy is 0.75. If the economy's full- employment real GDP is $900 billion and its equilibrium real GDP is $800 billion, there is a recessionary expenditure gap of:
A. $25 billion
B. $100 billion
C. $133 billion
D. $400 billion
A. $25 billion
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A trend is
A) a measure of closeness on a scatter diagram. B) a general tendency for a variable to rise or fall. C) the maximum value of a variable. D) the minimum value of a variable. E) the difference between the maximum value of a variable and the minimum value of the variable.
Consider the following statement: "If the government attempts to raise employment through increased fiscal spending, all it will end up doing is increasing the price level." The statement rests on the assumption that:
a. the aggregate demand curve is a horizontal line. b. the aggregate supply curve is a vertical line. c. the aggregate supply curve is upward-sloping. d. the aggregate supply curve is downward-sloping. e. the aggregate supply curve is a horizontal line.
A U.S. purchase of oil from overseas paid for with foreign currency it already owned
a. increases U.S. net exports, and increases U.S. net capital outflow. b. increases U.S. net exports, and decreases U.S. net capital outflow. c. decreases U.S. net exports, and increases U.S. net capital outflow. d. decreases U.S. net exports, and decreases U.S. net capital outflow.
A depreciation of the U.S. real exchange rate induces U.S. consumers to buy
a. fewer domestic goods and fewer foreign goods. b. more domestic goods and fewer foreign goods. c. fewer domestic goods and more foreign goods. d. more domestic goods and more foreign goods.