The Congressional Budget Office estimates the size of the government purchases multiplier to be
A) 0.1 - 0.6.
B) 0.3 - 1.5.
C) 0.5 - 2.5.
D) 2.0 - 3.0.
Answer: C
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A firm should shut down in the short run if the price is less than the:
A) average fixed cost. B) average total cost. C) average variable cost. D) marginal cost.
The term "other things equal" means that:
A. the associated statement is normative. B. many variables affect the variable under consideration. C. a number of relevant variables are assumed to be constant. D. when variable X increases so does related variable Y.
Assuming a perfectly competitive market implies that households do not need knowledge of qualities and prices of everything available in the market.
Answer the following statement true (T) or false (F)
In a market for apples, a consumer purchases 30 pounds when the price of apples is $1 per pound and the consumer's income is $5,000 per month
When the price of apples increases to $2 per pound, without any change in the consumer's income, he decides to purchase only 15 pounds of apples. Suppose, after a given period of time, the consumer's income falls to $3,000 per month. His consumption of apples also decreases to 10 pounds. Using a graph, illustrate the difference between change in quantity demanded and the change in demand for apples.