Refer to the above data. Assume that investment Ig is not affected by the income GDP level. The multiplier for this private open economy is:
All figures in the table below are in billions.
A. 1.25
B. 2.00
C. 2.50
D. 3.33
D. 3.33
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A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:
a. the demand curve is horizontal, reflecting infinite price elasticity. b. the company sells the same number of bus tickets both before and after the price change. c. the demand curve for bus tickets must have shifted to the right. d. the firm is operating in a range of the demand curve that is unit elastic. e. the price should be lowered further so that a larger quantity can be sold.
"I'm tired of eating muffins for breakfast. Today, I'm trying a bagel." These statements most clearly reflect the:
a. law of increasing returns to scale. b. second law of demand. c. law of diminishing marginal utility. d. law of comparative advantage.
Who bears the burden of an excise tax if demand is perfectly inelastic; if supply is perfectly inelastic? Use graphs in your explanation
Using the concepts of aggregate demand and aggregate supply, explain how the economy reaches an equilibrium level of real GDP and price level.
What will be an ideal response?