The multiplier measures the:
A. number of times each dollar is spent in the economy.
B. effect of government spending or tax cuts on national income.
C. supply of money in the economy.
D. effect of household spending on national income.
Answer: B
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New Keynesian economists
a. believe that the deviations of output below potential output during recessions are socially costly. b. presume that much unemployment is involuntary. c. attempt to improve the microeconomic foundations of the traditional Keynesian models, not challenge their major premises. d. Both a and c e. All of the above
According to the quantity theory of money, which one of the following economic variables would change in response to an increase in the money supply?
a. prices b. real income c. velocity d. employment
Assume the market for pork is perfectly competitive. When one pork buyer exits the market,
a. the price of pork increases. b. the price of pork decreases. c. the price of pork does not change. d. there is no longer a market for pork.
Government spending and income taxes can affect the level of
A. aggregate demand. B. income taxes. C. exports. D. investment.