Government spending increases by $40 billion and the equilibrium level of output increases by $200 billion. The government spending multiplier
A. is 4.
B. is 5.
C. is 6.
D. cannot be determined from this information, because the MPC is not given.
Answer: B
You might also like to view...
The existence of differences between the average earnings of men and women: a. proves the existence of discrimination
b. may be partially due to factors other than wage discrimination. c. proves that men on average invest more in human capital than do women. d. indicates that men are on average smarter than women are.
If there is a ceiling price below the equilibrium level, a decrease in demand will worsen the shortage
a. True b. False Indicate whether the statement is true or false
What does intra-industry trade create for the consumer?
a. greater variety of goods and lower costs b. greater variety of goods and higher costs c. lower variety of goods and lower costs d. lower variety of goods and higher costs
If Japanese tourists visit Yellowstone Park, what is the effect in the foreign exchange market?
a. It will increase demand for U.S. dollars. b. It will decrease demand for U.S. dollars. c. It will increase supply of U.S. dollars. d. It will decrease supply of U.S. dollars.