The simple multiplier formula assumes the following, except:
A. The economy has excess capacity and room to expand output
B. Firms will raise prices as buyers buy more of their output
C. People will spend more if they earn additional income
D. Business firms will increase production if demand for their output increases
B. Firms will raise prices as buyers buy more of their output
You might also like to view...
Changing tax regimes can sometimes be difficult and lead to inequities.
A. True B. False C. Uncertain
Over the past 50 years, the largest increase in average real wage has occurred among ________
A) male college graduates B) female college graduates C) males with post-college education D) females with post-college education
A production function in which the inputs are perfectly substitutable would have isoquants that are
A) convex to the origin. B) L-shaped. C) linear. D) concave to the origin.
An advantage of transfer payments over public works as a means of reducing unemployment is that transfer payments
a. provide more direct aid to those suffering most from unemployment. b. are unlikely to decrease unintended excess inventories of consumer goods. c. generate more secondary and tertiary employment. d. tend to have a larger multiplier effect.