If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand, we can conclude that
A. Government spending decreased by $125 million.
B. Taxes increased by $500 million.
C. Government spending decreased by $100 million.
D. Taxes decreased by $100 million.
Answer: A
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Which of the following goods probably has the lowest (absolute value) short-run price elasticity of demand?
A) fresh fruit B) frozen dinners C) cars D) refrigerators
With cheaper communication technology and easy flow of information between countries,
a. industrial production becomes more labor intensive. b. the pattern of employment and production can change. c. the digital divide widens. d. transaction costs increase.
Suppose a professor gives up her teaching job to devote her time to writing textbooks. If the salaries of professors rise, her
a. accounting profit will rise b. accounting profit will fall c. explicit costs will rise d. economic profit from textbooks will fall e. economic profit from textbooks will rise
If a country wants to keep its exchange rate fixed, it must
A) allow its currency value to vary with market supply and demand in foreign exchange markets. B) be a member of the IMF. C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary. D) eliminate its foreign exchange reserves.