The equilibrium level of real GDP is $1,000, the target full-employment level of real GDP is $1,500, and the marginal propensity to consume is 0.75. The target can be reached if government spending is:
A. increased by $100 billion.
B. increased by $125 billion.
C. increased by $500 billion.
D. held constant.
Answer: B
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If the price of TVs produced by XYZ-TV Company falls from increases from $1,000 to $1,250 per TV set, then the:
A. supply of labor to the XYZ-TV Company decreases. B. supply of labor to the XYZ-TV Company increases. C. demand for labor by the XYZ-TV Company decreases. D. demand for labor by the XYZ-TV Company increases.
Economists believe that countries recently suffering hyperinflation have experienced
A) reduced growth. B) increased growth. C) reduced prices. D) lower interest rates.
Changing how production is organized cannot result in changes in productivity
Indicate whether the statement is true or false
An increase in government spending causes:
a. Aggregate supply to rise, which reduces the nation's average price level and increases real GDP. b. Aggregate demand to rise, which increases the nation's average price level and reduces real GDP. c. Always causes the passive deficit to rise. d. Aggregate supply to rise, which reduces the nation's average price level and reduces real GDP. e. Aggregate demand to rise, which increases the nation's average price level and increases real GDP.