In the simple Keynesian model, if the equilibrium level of income is $300 billion, the MPC is 0.75, and government expenditures increase by 20 billion. What is the new equilibrium level of income?
a. $320 billion
b. $380 billion
c. $220 billion
d. $520 billion
B
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A sales tax is divided so that buyers pay the full amount if
A) demand has unitary elasticity. B) supply has unitary elasticity. C) demand is perfectly inelastic. D) supply is perfectly inelastic.
If economies of scale are present, a firm can enhance its profits by
a. operating at any larger scale. b. operating at any larger scale up to the optimal scale. c. operating beyond the optimal scale. d. operating at a lower scale.
For a whole life policy, the policy holder pays
A) premiums based on current interest rates. B) a constant premium. C) premiums that vary with mortality risk. D) constantly declining premiums.
When indifference curves have ________ marginal rates of substitution, any interior choice that satisfies the tangency condition is the best affordable choice.
A. constant B. increasing C. declining D. positive