Answer the following statements true (T) or false (F)
1) Investment is not affected by current profits; it is affected by expected future profits only.
2) The multiplier measures the change in real GDP that results from a given change in the price level.
3) The multiplier effect magnifies the effect of a decrease in spending, resulting in a bigger decrease in real GDP.
4) The multiplier value is the reciprocal of the marginal propensity to consume.
1) F
2) F
3) T
4) F
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A.C. Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality
Indicate whether the statement is true or false
The Keynesian mechanism through which monetary policy affects the price level, real GDP, and employment depends on the impact of the:
A. interest rate on savings. B. inflation on investment. C. interest rate on investment. D. interest rate on bond prices.
During World War II, _______ percent of the United States' output was devoted to the war effort.
Fill in the blank(s) with the appropriate word(s).
Refer to the normal-form game of price competition shown below.Firm AFirm B??CD?A0,75,2?B5,10,8Which of the following represents the set of possible pure strategy Nash equilibria?
A. {C, D} B. {A, B} C. {A, C} D. {(A, C), (A, D), (B, C), (B, D)}