If the MPC is 0.6, and the government increases its spending by $300b, the overall effect on GDP will be:
A. a decrease of $750b.
B. an increase of $750b.
C. a decrease of $550b.
D. an increase of $250b.
B. an increase of $750b.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
If the price increases by 20 percent and the quantity supplied increases by 40 percent, what does the elasticity of supply equal?
What will be an ideal response?
Which of the following tests is used to compare the Ordinary Least Squares (OLS) estimates and the Weighted Least Squares (WLS) estimates?
A. The White test B. The Hausman test C. The Durbin-Watson test D. The Breusch-Godfrey test
An inflation shock is:
A. the level of inflation consistent with output in an expansionary gap. B. a change in the inflation rate generated by excessive aggregate spending. C. the level of inflation consistent with output in a recessionary gap. D. a sudden change in the normal behavior of inflation, unrelated to the nation's output gap.