If government spending is increased by $500, taxes are reduced by $200, and the MPS is 0.2, equilibrium output will change by
A. $1,500.
B. $1,700.
C. $3,300.
D. $3,500.
Answer: C
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In long-run equilibrium, the typical perfectly competitive firm will:
a. earn zero economic profit. b. change plant size in the long run. c. change output in the short run. d. do any of these.
A time-inconsistent monetary policy is one that:
a. is set by congressional decree. b. is based on monetary targets established by law. c. changes over time as economic conditions change. d. follows a zero percent inflation rate. e. does not adapt to changing economic conditions.
If aggregate expenditures are lower than real GDP:
A. actual real output is less than equilibrium real output. B. aggregate output increases. C. employment increases. D. there will be unplanned increases in inventories.
If the price of computers falls during a period when the average price level remains constant, which of the following has occurred?
A. Inflation B. A change in relative prices C. Deflation D. A recession