If the spending multiplier is equal to 5, then a $1 initial increase in investment spending will lead to a:

a. 5 percent decrease in real GDP.
b. 5 percent increase in real GDP.
c. $5 decrease in real GDP.
d. $5 increase in real GDP.
e. 0.05 percent increase in real GDP.


d

Economics

You might also like to view...

Government is viewed in the economic way of thinking as many different people interacting on the basis of

A) fear of punishment rather than hope for reward. B) legal considerations rather than profitability. C) prevailing property rights. D) principles of cooperation rather than of competition. E) regard for the public interest rather than private interest.

Economics

?Wind ChimesSun DialsDeena912Artie68Consider two individuals, Artie and Deena, who produce wind chimes and sun dials. Artie's and Deena's weekly productivity are shown in Table 18.4. Which of the following is TRUE?

A. Artie has a comparative advantage in producing wind chimes but not sun dials. B. Artie has a comparative advantage in producing sun dials but not wind chimes. C. Artie has a comparative advantage in producing both goods. D. Artie does not have a comparative advantage in producing either good.

Economics

The main purpose of hiring the celebrity endorser is to:

A. make the customers try the product for the first time. B. make the customers buy the product repeatedly. C. convince the customers that using the product will turn them into celebrities as well. D. pay for the endorser's retirement expenses.

Economics

When comparing market and public sector decision making, which statement is NOT true?

A. Self-interest is the motivating force in each decision making arena. B. Collective (political) outcomes and economic outcomes may differ. C. In both decision making sectors, there are scarcity constraints. D. In both decision making sectors, majority rule is how things are done.

Economics