The ratio of the increase in ________ to the increase in ________ is called the multiplier
A) induced expenditure; equilibrium real GDP
B) autonomous expenditure; equilibrium real GDP
C) equilibrium nominal GDP; autonomous expenditure
D) equilibrium real GDP; autonomous expenditure
D
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In a closed economy the marginal propensity to consume is 0.60 and the marginal propensity to invest is 0.10. What is the size of the multiplier?
A) 1.33 B) 2.33 C) 3.33 D) 0.70
Suppose the state legislature in your state imposes a state licensing fee of $100 per year to be paid by all firms that file state tax revenue reports. This new business tax:
A) increases marginal cost. B) decreases marginal cost. C) increases marginal revenue. D) decreases marginal revenue. E) none of the above
When the Fed buys U.S. government securities from a bank, that bank's excess reserves and total reserves increase, but there is no change in required reserves
a. True b. False Indicate whether the statement is true or false
If the price of a product falls, that product becomes cheaper and people will want to purchase more of it in place of other goods. This statement best describes:
A) the income effect. B) the substitution effect. C) a complementary good. D) an inferior good.