What is the multiplier effect?
What will be an ideal response?
The series of induced changes in consumption spending that result from an initial change in autonomous expenditure is called the multiplier effect.
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A serious burden of a budget deficit and an increase in the national debt comes on the supply side because large budget deficits
a. discourage consumption and therefore lead to production cutbacks. b. lead to lower interest rates and therefore to excessive optimism by consumers and businesspeople. c. discourage investment and therefore may reduce the growth of the nation's capital stock. d. discourage foreign investment and therefore limit employment opportunities.
The authors argue that the best way to think of competition is
What will be an ideal response?
Suppose a lawn-mowing business has a mower for which it paid $1000 and workers for which they pay $10 per hour. Suppose each mower can mow a lawn per hour.
A. Their total fixed cost is $1000/lawns mowed. B. Their variable cost per lawn is $10 + $1000/lawns mowed. C. Their average fixed cost is $1000. D. Their average variable cost is $10 per lawn mowed.
Recessions
A. almost never last more than two consecutive quarters. B. do not occur in developed countries, including the United States. C. cause the unemployment rate to increase. D. are always followed by long periods of high rates of real economic growth.