If a $100 billion increase in government spending results in a $500 billion increase in real GDP, then the value of the multiplier:
A. equals 0.2.
B. equals 5.
C. equals $400 billion.
D. cannot be determined.
Answer: B
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Problems with the federal government budget process include: a. budgeting that allows the President too much discretion in spending decisions
b. budgeting that increases the flexibility of discretionary fiscal policy. c. a budget outline that needs to be approved with at least a two-thirds majority vote. d. most of the expenditures being for entitlement programs. e. a brief budgeting that does not allow Congress to study whether the budget is an appropriate tool for fiscal policy.
Which of the following are examples of injections?
a. government purchases, net taxes and exports b. government purchases, investment spending and exports c. net taxes, imports and household saving d. household saving, imports and government purchases e. exports, imports and household saving
Which term refers to the percentage of the population who live below the poverty line?
a. Poverty rate b. Near-poor c. Poverty gap d. Income class
Good X and good Y are substitutes. If the price of good Y increases, then the
a. demand for good X will decrease. b. quantity demanded of good X will decrease. c. demand for good X will increase. d. quantity demanded of good X will increase.