If the MPC in an economy is 0.75 and aggregate expenditures increase by $5 billion, then equilibrium GDP will increase by:
A. $3.75 billion
B. $6.7 billion
C. $8.75 billion
D. $20 billion
D. $20 billion
You might also like to view...
The value (purchasing power) of each unit of money
a. is largely independent of the money supply. b. tends to increase as the money supply expands. c. increases as the general level of prices rise. d. is inversely related to the general level of prices.
If the level of government expenditures is given, budget surpluses and deficits depend on tax revenues, which tend to vary directly with GDP.
a. true b. false
When, over a sustained period of time, the growth of aggregate business activity falls below what is considered the normal growth rate, the economy necessarily experiences
A. inflation. B. an expansion. C. a recession. D. deflation.
Market failure results in
A. inflation. B. Pareto optimality. C. budget deficits. D. waste.