Suppose an economy can be described by the consumption function C = 250 + 0.90YD and I = $300. What is the multiplier?
A. 10.
B. 0.9.
C. 0.1.
D. 3.
Answer: A
You might also like to view...
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
A few economies have the interesting characteristic that exports are more than 100 percent of the economy's GDP. How is this possible?
What will be an ideal response?
Answer the following questions true (T) or false (F)
1. A repurchase agreement is the same as an open market purchase of Treasury securities. 2. Changes in interest rates affect all four components of aggregate demand. 3. Expansionary monetary policy refers to the Fed's increasing the money supply and increasing interest rates to increase real GDP.
Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. 
If before Tracy chose, Amy could make a credible commitment to choose either the top or bottom branch when her turn came, then we would expect Tracy to get a payoff of ________ and Amy to get a payoff of ________.
A. 75; 150 B. 125; 125 C. 300; 200 D. 25; 225