An economy has no imports or income taxes. The MPC is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The new level of real GDP is
A) $140 billion. B) $128 billion. C) $136 billion. D) $124 billion. E) $132 billion.
C
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Perhaps the most compelling argument against the redistribution of income is that __________.
a. it does not work b. it is unfair c. we cannot afford it
Real business cycle and new Keynesian models disagree upon
a. whether people form their expectations rationally. b. whether changes in unemployment are voluntary or involuntary. c. whether individuals engage in optimizing behavior at all times. d. whether changes in the money supply affect output in the long-run.
According to purchasing power parity, the nominal exchange rate between the U.S. and another country should equal the price level of foreign goods divided by the price level of U.S. goods
a. True b. False Indicate whether the statement is true or false
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.