Suppose there is a $20 million increase in government spending. We know that this increase in government spending will cause which of the following to occur?
A. equilibrium real GDP will increase by exactly $20 million.
B. an increase in equilibrium real GDP and no change in the multiplier.
C. an increase in equilibrium real GDP and a reduction in the multiplier.
D. an increase in equilibrium real GDP and an increase in the multiplier.
Answer: B
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Which of the following theorems predicts that trade benefits the abundant factors of a country and harms the scarce factors?
A) The Stolper-Samuelson theorem. B) The Rybczynski theorem. C) The Heckscher-Ohlin theorem. D) None of the above.
Fred recently lost his job as a teller at the bank. The bank explained that they were replacing Frank and others with ATM machines. Fred falls into a category of unemployment known as
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively
a. inelastic. b. elastic. c. robust. d. inverse.
The Lost Decade refers to the years between approximately
A) 1980 and 1990. B) 1987 and 1997. C) 1972 and 1980. D) 1960 and 1970.