The effect of an initial spending change causing a larger change in overall output is:
A. the multiplier effect
B. crowding out.
C. the income effect.
D. the substitution effect.
A. the multiplier effect
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Consider the market for purple magic markers. The demand for purple magic markers is perfectly elastic and the supply curve is upward sloping
If sellers of purple magic markers are taxed $1 per marker, how will the tax be divided between the buyer and seller? A) The sellers will pay the entire tax. B) The buyers will pay the entire tax. C) The tax will be evenly divided between the sellers and buyers. D) More information is needed to determine how the tax is split.
Since classical economists and monetarists believe that the economy operates at full employment, real GDP, that is, along the vertical segment of aggregate supply:
a. any increase in the money supply can only end up raising the price level. b. any increase in the money supply can only end up lowering the price level. c. any decrease in the money supply can only end up raising the price level. d. changes in the money supply will not affect the price level. e. any increase in the money supply will cause both nominal and real GDP to increase.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
The highest quintile of households in the income distribution:
A. receives about 51 percent of the total income. B. is comprised of 10 percent of all households. C. is comprised of 5 percent of all households. D. receives about 43 percent of the total income.