If the spending multiplier is equal to 4, then a $25 initial increase in investment spending will lead to a:
A. $100 increase in real GDP.
B. $1 decrease in real GDP.
C. $1 increase in real GDP.
D. $100 decrease in real GDP.
Answer: A
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If new firms enter a monopolistically competitive market structure in the long run, ________
A) the demand curves faced by the existing firms shift to the right B) the demand curves faced by the existing firms become perfectly inelastic C) the demand curves faced by the existing firms become more elastic D) the supply curves of the existing firms become relatively more elastic
The LM curve slopes upward because
a. as income rises, savings rise, increasing output. b. as interest rates rise, the money supply rises, increasing output. c. as interest rates rise, planned investment must fall, increasing output. d. as income increases, money demand rises, which increases interest rates. e. none of the above.
Davis (1963) compares U.S. and British industrialization. What does he note in each country during industrialization?
(a) A rise in the number of giant banks in both countries (b) A rise in the number of small banks in the U.S. but a rise in the number of giant banks in Great Britain (c) A rise in the number of small banks in Great Britain but a rise in the number of giant banks in the U.S. (d) A decrease in capital accumulation because of a small number of free banks
Implicit and explicit costs are different in that:
A. implicit costs are relevant only in the short run. B. the former refer to nonexpenditure costs and the latter to out-of-pocket costs. C. explicit costs are relevant only in the short run. D. the latter refer to nonexpenditure costs and the former to out-of-pocket costs.