If the gap between the actual level of output and the "natural real GDP" is 1000 and the marginal leakage rate is 0.5 then the simple Keynesian model suggests that the government could close the gap by
A) increasing autonomous expenditures by 1000.
B) increasing autonomous expenditures by 250.
C) increasing autonomous expenditures by 500.
D) decreasing taxes by 500.
C
You might also like to view...
Gross domestic product is the money value of all final goods and services produced in an economy in a year.
Answer the following statement true (T) or false (F)
Which of the following statements is true?
A) Hours of labor that go into producing a product is a better unit of account than paper money. B) When money is used as a yardstick to describe the price of various goods and services, it is serving as a store of value. C) The necessary condition required for money to function as a medium of exchange is that it also needs to be a store of value. D) One of the limitations of using money is that it does not allow for the transfer of purchasing power into the future.
When the aggregate demand curve shifts to the right, intersecting the aggregate supply curve on its upward-sloping or vertical segment,
a. demand-pull inflation occurs. b. cost-push inflation occurs. c. stagflation occurs. d. deflation occurs. e. the shift pulls the price level down.
David increases the number of companies in which he holds stocks
a. This reduces risk's standard deviation and firm-specific risk. b. This reduces risk's standard deviation and market risk. c. This raises market risk, but lowers firm-specific risk. What happens to overall risk is unclear. d. This raises firm-specific risk, but lowers market risk. What happens to overall risk is unclear.