Given a $500 billion AD shortfall and an MPC of 0.75, the desired fiscal stimulus would be
A. A $2 trillion increase in government expenditures.
B. A $375 billion increase in government expenditures.
C. A $125 billion increase in government expenditures.
D. A $500 billion increase in government expenditures.
Answer: C
You might also like to view...
Keynes was especially interested in explaining movements of ________ because he wanted to explain why the Great Depression had occurred and how government policy could be used to increase ________ in a similar economic situation
A) aggregate output; wages B) aggregate output; employment C) wage rates; wages D) wage rates; employment
Refer to the table below. If at the current advertising level, A = $10,000, B = $15,500, and C = $7,800, to maximize profit, which of the following should the firm do?
The table above shows the current costs for a firm to advertising on the radio, television, and newspaper.
A) The firm should decrease its advertising on the radio and increase its advertising in newspapers.
B) The firm should decrease its advertising on the television and increase its advertising in newspapers.
C) The firm should increase its advertising on the television and decrease its advertising in newspapers.
D) The firm should decrease its advertising on the radio and decrease its advertising in newspapers.
Heath's income elasticity of demand for concerts is 2 . All else equal, this means that if his income increases by 10 percent, he will purchase tickets for
a. 2 percent more concerts. b. 5 percent more concerts. c. 10 percent more concerts. d. 20 percent more concerts.
A price ceiling set below the equilibrium price will
A) clear the market for the good. B) result in a shortage of the good. C) result in a surplus of the good. D) induce new firms to enter the industry.