Based on the multiplier effect, what does each successive round of purchasing do?
a. decrease aggregate demand and supplier income
b. increase aggregate demand and supplier income
c. decrease aggregate demand, and increase supplier income
d. increase aggregate demand, and decrease supplier income
b. increase aggregate demand and supplier income
You might also like to view...
Consider the following data for a closed economy:
a. Y = $12 trillion b. C = $8 trillion c. I = $3 trillion d. TR = $2 trillion e. T = $3 trillion Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.
One reason why most economists forecast that the effects of NAFTA on the U.S. economy would be small is because
A) NAFTA does not bring down tariffs far enough. B) the Mexican economy is small relative to the U.S. economy. C) NAFTA trade opening provisions only cover a handful of sectors. D) Mexico was not expected to live up to its obligations under the agreement. E) the United States was not expected to live up to its obligations under the agreement.
Two economists, Smith and Jones, are discussing the currently high unemployment rate. Smith says that something ought to be done quickly because the economy may not be able to restore itself to full employment. Jones says that it is better to take a "hands-off" approach. Which of the following is most likely to be true?
A) Smith and Jones are most likely both Keynesian economists with a few minor differences of opinion. B) Smith and Jones are most likely both classical economists with a few minor differences of opinion. C) Jones is likely to be a Keynesian economist and Smith is likely to be a classical economist. D) Smith is likely to be a Keynesian economist and Jones is likely to be a classical economist. E) none of the above.
Maria buys a cup of coffee every day after her economics class. The first cup of coffee always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Maria is experiencing
A) irrational behavior. B) the law of diminishing marginal utility. C) the income effect. D) the substitution effect.