The formula to compute the spending multiplier is:
A. 1 / (MPC + MPS).
B. 1 / (1 ? MPC).
C. 1 / (1 ? MPS).
D. 1 / (C + I).
Answer: B
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What does the Classical model predict about the relationship between a country's budget balance (total revenue minus total spending) and a country's level of real interest rates and investment in a closed economy? Use a graph of the capital
market to illustrate.
The North American Free Trade Agreement affects trade between
a. the United States, Cuba, and Brazil b. the United States, Canada, and Mexico c. the United States, Puerto Rico, and Cuba d. Brazil, Bolivia, Peru, and Columbia e. China and the United States
An increase in the price level shifts the money demand curve to the left, causing interest rates to increase
a. True b. False Indicate whether the statement is true or false
At the end of 2012, the government had a debt of about $11.3 trillion. If during 2013 real GDP rose 2% and inflation was 2.2%, what is the largest deficit the government could have run without raising the debt-to-GDP ratio?
a. about $226.0 billion b. about $248.6 billion c. about $474.6 billion d. about $561.8 billion