Refer to the above graph for a private closed economy. If the consumption schedule shifts up by $50 B at all levels of income or output, then the equilibrium GDP will increase to:
A. $550 B
B. $300 B
C. $600 B
D. $150 B
C. $600 B
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When gross investment is positive, net investment ________.
A. must be positive B. is always zero C. may be either positive or negative D. must be negative
Velocity is V, the quantity of money is M, the price level is P, and real GDP is Y. Which of the following formulas is correct?
A) Y = (P × M) ÷ V B) Y = V × M C) Y = (P + M) - V D) V = (P + Y) × M E) V = (P × Y) ÷ M
Refer to Figure 14.1. Other things equal, an increase in the inflation rate is best represented as a movement from
A) point A to point B. B) point C to point A. C) point C to point B. D) point B to point C.
Suppose equilibrium real GDP is currently at $800 billion and investment is $100 billion. If an increase in the interest rate reduces investment from $100 billion to $75 billion, and the MPC is 0.8, the new level of equilibrium real GDP will be:
A. $500 billion. B. $600 billion. C. $675 billion. D. $775 billion.