Explain the economic impact of an increase in the multiplier.
What will be an ideal response?
The multiplier magnifies the fluctuations in economic activity initiated by changes in investment spending, net exports, government spending, or consumption spending. The larger the multiplier the greater will be the impact of any changes in spending on real GDP.
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When the Federal Reserve increases the money supply, it has the immediate effect of creating wealth
a. True b. False
In the aggregate expenditures model, equilibrium occurs if:
A. aggregate expenditures (AE) are greater than GDP. B. aggregate expenditures (AE) are less than GDP. C. there is no unplanned inventory depletion or accumulation. D. consumption equals investment.
Refer to the information provided in Figure 15.4 below to answer the question(s) that follow. 
Figure 15.4 Refer to Figure 15.4. If The Hand Made Shirt Shop is monopolistically competitive, what is the maximum level of average variable cost that would lead to the firm continuing to operate at the profit-maximizing level in the short run?
A. $18 B. $22 C. $23 D. $25
Economic growth can best be portrayed as a(n)
A. outward shift of the production possibilities frontier. B. movement from a point inside to a point outside of the production possibilities frontier. C. inward shift of the production possibilities frontier. D. movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities frontier.