Which of the following correctly describes the spending multiplier?
A. The initial change in consumption, investment, government spending, or net exports divided by the change in equilibrium GDP.
B. An initial increase in aggregate expenditures divided by the equilibrium GDP.
C. An initial increase in aggregate expenditures divided by the change in equilibrium GDP.
D. The ratio of the change in real GDP to an initial change in any component of aggregate expenditures.
Answer: D
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Indicate whether the statement is true or false
If oil refiners expect the government to tax away any profits created by international supply disruptions, refiners will choose to
A) carry smaller inventories of crude petroleum. B) leave the oil refining business. C) prevent the price of crude petroleum from rising. D) raise their prices to cover their added risks. E) take a higher percentage of their profits as windfalls.
A perfectly competitive firm's short-run break-even output occurs
A) at the minimum point of its average variable cost curve. B) at the minimum point of its average total cost curve. C) at the minimum point of its marginal cost curve. D) at the intersection of its total cost curve and its marginal revenue curve.
A firm with positive accounting profit may be suffering an economic loss
a. True b. False