Which of the following best describes the simple spending multiplier?
a. It shows the magnified change in planned aggregate spending that arises from a change in output
b. It shows the magnified change in equilibrium output demanded that arises from a change in income.
c. It shows the magnified change in planned aggregate spending that arises from a change in equilibrium output.
d. It shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending.
e. It shows the change in planned aggregate spending that arises from a change in real output.
d
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The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,
A) sand buyers pay the entire tax. B) sand sellers pay the entire tax. C) the tax is split evenly between the buyers and sellers. D) the government pays the entire tax. E) the government collects no tax revenue because the supply is perfectly inelastic.
Suppose the two countries can trade shares in the ownership of their perspective assets without any restrictions. Assume that the consumers in both countries would like to totally smooth their consumption. Describe the outcomes
What will be an ideal response?
If, after a deposit outflow, a bank needs an additional $3 million to meet its reserve requirements, the bank can
A) reduce deposits by $3 million. B) increase loans by $3 million. C) sell $3 million of securities. D) repay its discount loans from the Fed.
If the money supply increases this will cause the interest rate to rise, investment to fall and GDP to fall
a. True b. False Indicate whether the statement is true or false