If the multiplier is 2, the MPC is
A. .1.
B. .2.
C. .5.
D. .8.
E. 1.0.
C. .5.
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The expenditure multiplier leads to greater than one-for-one changes in output when autonomous expenditure changes because
A. changes in inventories signal producers to adjust the level of output. B. multiple deposits are generated when new reserves are produced through fractional reserve banking. C. the direct changes in expenditure change the income of households, which leads to additional changes in expenditure. D. autonomous expenditure supports more output than induced spending.
A country's unemployment rate fell from 6% to 5% during a year. If its total population, capital stock and output remain unchanged, ________
A) its income per worker will increase B) its income per capita will increase C) its income per worker will fall D) its income per capita will fall
Suppose monetary policy results in the exchange rate falling. As a result,
A) exports do not change because they are autonomous and imports decrease. B) net exports decrease. C) exports increase and imports increase. D) exports decrease and imports decrease. E) net exports increase.
Bonds with relatively high risk of default are called
A) Brady bonds. B) junk bonds. C) zero coupon bonds. D) investment grade bonds.