If the crowding-out effect is complete and the marginal propensity to save is 0.2, then an increase in government spending of $500 billion will generate how much more real Gross Domestic Product (GDP)?
A. $0
B. $500 billion
C. $50 billion
D. $400 billion
Answer: A
You might also like to view...
Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded
a. True b. False Indicate whether the statement is true or false
If the price of good X becomes lower, then the level of consumer surplus becomes
A. unchanged. B. lower in the short-run but higher in the long run. C. lower. D. higher.
Ideally, insurance companies would like to charge
a. High premium to low risk clients b. Low premium to high risk clients c. The same premium to all clients d. High premium to high risk and low premium to low risk clients
Which statement is true?
A. Virtually all of the poor receive public assistance, but not food stamps. B. Virtually all of the poor receive food stamps, but not public assistance. C. Virtually all of the poor receive public assistance and food stamps. D. None of these statements are true.