The smaller the MPC the ________ the expenditure multiplier and the ________ the effect of a change in expenditure on equilibrium output.
A. larger; smaller
B. larger; larger
C. smaller; smaller
D. smaller; larger
Answer: C
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The short run is best defined as:
A. a period of time sufficiently short that at least one factor of production is fixed. B. one year or less. C. the period of time between quarterly accounting reports. D. a period of time sufficiently short that all factors of production are variable.
An increase in the money supply will
A) decrease the quantity of money held at every interest rate. B) increase the quantity of money held at every interest rate. C) shift the LM curve leftward. D) None of the above.
A perfectly elastic demand curve is
a. a vertical straight line b. a horizontal straight line c. a downward-sloping straight line d. an upward-sloping straight line e. not a straight line
Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate
a. True b. False Indicate whether the statement is true or false