In a short-run Keynesian model where the marginal propensity to consume is 0.5, to offset a recessionary gap resulting from a $1 billion decrease in autonomous consumption, government purchases must be:
A. increased by $1 billion.
B. increased by $0.5 billion.
C. decreased by $1 billion.
D. increased by $2 billion.
Answer: A
You might also like to view...
If imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is
A) $1 billion. B) $1.9 billion. C) $2 billion. D) $2.1 billion.
A market-clearing curve for a good:
A. shows the quantities supplied and demanded for a particular product. B. shows the combinations of prices, both for that good and for other related goods, that bring supply and demand for the good into balance. C. shows the quantities supplied and demanded for all goods. D. shows equilibrium in a particular market.
______ raised questions about the Heckscher-Ohlin theory.
Fill in the blank(s) with the appropriate word(s).
The United States imports t-shirts because
A) it is a dangerous job to produce them. B) the United States has a lower opportunity cost of production. C) the United States must import goods and services from other countries so that they can develop economically. D) foreign economies have an absolute advantage in their production. E) foreign nations have a lower opportunity cost of production.