Other things equal, if $100 billion of government purchases (G) is added to private spending (C + I g + X n ), GDP will:
A. increase by $100 billion.
B. increase by less than $100 billion.
C. increase by more than $100 billion.
D. fall by $100 billion.
C. increase by more than $100 billion.
You might also like to view...
Jake, Sr. sells the family business, a factory that produces snake oil, to Jake, Jr., for $100, even though the factory has been assessed at $400,000. How will this transaction affect GDP?
A. Investment will increase by $100. B. Investment will increase by $400,000. C. Consumption will increase by $400,000. D. GDP will not be affected by the transaction.
If MPC = 0.8, a $200 billion increase in government purchases would have what size effect on the "first round" of induced added consumption, and what total effect on AD?
a. increase "first round" consumption by $80 billion; increase AD by $400 billion b. increase "first round" consumption by $160 billion; increase AD by $1 trillion c. increase "first round" consumption by $200 billion; increase AD by $1 trillion d. increase "first round" consumption by $800 billion; increase AD by $4 trillion
Whenever firms can freely enter and exit a market,
a. firms can never earn a profit. b. prices will be the same for all firms in the market. c. products will be identical for all firms in the market. d. profits and losses play an important role in determining the size of the industry.
Which of the four categories of resources used in production refers to the physical and mental effort expended by people?
a. labor b. land c. capital d. entrepreneurial ability