Refer to Figure 27-11. If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph, the difference in real GDP between point A and point B will be
A) less than $100 billion.
B) $100 billion.
C) more than $100 billion.
D) There is insufficient information given here to draw a conclusion.
C
You might also like to view...
What is marginal factor cost? How is it related to the supply curve of an input?
What will be an ideal response?
When the non exclusion aspect of a public good does not hold, but the nondiminishability component is present, how might the free rider problem be overcome and social efficiency achieved? Give examples from common social practice to illustrate your answer.
What will be an ideal response?
If market signals result in pollution beyond the optimal level, then
A. The economy experiences government failure. B. The government is allocating resources inefficiently. C. A laissez faire approach will reduce the level of pollution. D. The market mechanism has failed to achieve efficiency.
When workers boycott a company because it does business with a firm whose employees are on strike, that is a
A) secondary boycott. B) primary boycott. C) strike. D) sympathy strike.