Refer to Figure 23-3. Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is $200 billion. If the MPC is 0.8, then what is the distance between N and L or by how much did government spending change?
A) $16 billion
B) $40 billion
C) $200 billion
D) $1,000 billion
B
You might also like to view...
Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. For Pat to earn normal profit, Pat's accounting profit would have to be ________.
A. 0 B. $35,000 C. $50,000 D. $15,000
The opportunity cost of current consumption differs for borrowers and savers only if the interest rate for savers differs from the interest rate for borrowers.
Answer the following statement true (T) or false (F)
In the real world, we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is
A) some countries have more resources than other countries. B) production of most goods involves increasing opportunity costs. C) tastes for many traded goods are similar in many countries because of globalization. D) comparative advantage works better in theory than in practice.
A nation that lacks sufficient capital given its size even though it has ample natural resources is
a. the United States. b. Japan. c. Canada. d. China.