Describe the probable impact of an increase in government spending assuming no change in taxes or private spending and less than full-employment output.
What will be an ideal response?
Assuming no change in taxes or private spending, the probable effect of an increase in government spending will be expansionary. Furthermore, the government spending increase will be multiplied in terms of its impact on equilibrium GDP. The simple multiplier in this case should equal the reciprocal of the marginal propensity to save.
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Nigeria would be classified by the International Monetary Fund as
A) a resource-based economy. B) an emerging market economy. C) a transition economy. D) a developing economy. E) an advanced economy.
Which of the following would shift the LM curve?
A) an increase in the tax rate B) an increase in the real money supply C) a reduction in business confidence D) All of these.
In a Cournot oligopoly, managers determine quantity ________ collusion and the managers at each firm believe that once their rival managers choose their quantity, they ________ change it.
A) with no; will not B) with; will C) with; will not D) with no; will
Real GDP is calculated because
a. it is a much better measure of economic behavior than nominal GDP b. the value of the dollar is increasing c. it allows us to make comparisons between countries d. nominal GDP has no theoretical foundation e. nominal GDP is corrected for inflation