A small reduction in government purchases can lead to a sizeable reduction in real GDP because of
A. lower tax revenues.
B. the multiplier effect.
C. demand-pull inflation.
D. increased transfer payments.
Answer: B
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List two things that can cause the industry supply curve to shift
What will be an ideal response?
Which of the following is not a component of investment spending?
A) spending by firms on equipment B) the purchase of 1000 shares of corporate stock C) residential construction D) changes in inventories
Explain what will happen if firms in a monopolistically competitive industry are earning positive economic profits
What will be an ideal response?
An increase in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve. b. results in a movement upward and to the right along a fixed supply curve. c. shifts the supply curve to the left. d. shifts the supply curve to the right.