The spending multiplier is defined as:

A. the ratio of the change in equilibrium real GDP to the initial change in spending.
B. the change in initial spending divided by the change in personal income.
C. 1 / (marginal propensity to consume).
D. 1 / (1 ? marginal propensity to save).


Answer: A

Economics

You might also like to view...

Which of the following nations can be called a mixed economy? 

A. The United States. B. Italy. C. Sweden. D. France. E. All of these nations are mixed economies.

Economics

In the above figure, the curve has a slope that is ________

A) positive and becoming larger in magnitude B) positive and becoming smaller in magnitude C) negative and becoming larger in magnitude D) negative and becoming smaller in magnitude

Economics

Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes

a. create a negative externality for Steven and a positive externality for Sally b. are not related to the issue of property rights since all parties are homeowners c. are an example of an efficient market since the benefits to one party are balanced by costs to another party d. are a public good because all three parties can hear the wind chimes e. create a positive externality for Steven and a negative externality for Sally

Economics

In the real world, wage negotiations typically do not drag on for years:

A. because the company can simply offer the split that would eventually occur if the two sides played all the rounds. B. unless the employees play an ultimatum game using a union to negotiate. C. because neither a company nor employees can afford to not work for that long. D. None of these statements is true.

Economics