The formula for aggregate expenditure is
A) AE = C + I + depreciation - NX. B) AE = C + I + G.
C) AE = C + I + G - NX. D) AE = C + I + G + NX.
D
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The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, self-employment income, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the
a. opportunity cost approach. b. resource cost-income approach. c. expenditure approach. d. monetarist approach.
If the government wishes to increase GDP by $1,200b, and the MPC is 0.8, it should:
A. increase its spending by $960b. B. increase its spending by $240b. C. decrease its spending by $240b. D. decrease its spending by $960b.
What happens to the value of the deposit multiplier when banks hold excess reserves?
A) It is larger than the value implied by the formula. B) It is smaller than the value implied by the formula. C) It is only affected by the amount of loans that banks are willing to make, not the amount of excess reserves held. D) There is insufficient information to answer the question.
What level of daily income is the World Bank's measure of extreme poverty?
A. $1.00 B. $1.90 C. $2.25 D. $3.00