Explain the process by which an initial change in autonomous spending can lead to an even greater change in total spending
When autonomous spending increases, the multiplier process causes Real GDP to grow by some multiple of the initial increase in spending. This occurs because an increase in spending generates an equal increase in income. As income increases, another round of spending will be generated (MPC × increase in spending), which will lead to yet another increase in income. This spending-income cycle will continue until the dollar amount left to spend becomes very tiny. Theoretically, the resulting change in Real GDP is equal to [1/(1-MPC)] times the initial change in spending.
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If demand is inelastic, an increase in the price will
A) decrease total revenue. B) increase total revenue. C) not change total revenue. D) increase the quantity demanded.
Are checks money?
What will be an ideal response?
A statistical tool used to measure inequality is
A) the absolute poverty rate. B) the relative poverty rate. C) the Lorenz curve. D) the Gini coefficient.
Along a linear demand curve, total revenue is maximized when demand is
a. elastic b. inelastic c. unit elastic d. perfectly elastic e. perfectly inelastic