In the situation shown on this graph, the multiplier effect on aggregate demand is ______.
a. half the effect the initial government purchase has on it
b. double the effect the initial government purchase has on it
c. equal to the effect the initial government purchase has on it
d. equal but opposite to the effect the initial government purchase has on it
b. double the effect the initial government purchase has on it
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A decline in interest rates tends to expand the economy by
A. encouraging private investment and decrease in bank lending. B. appreciating the currency and lowering the profitability criterion for investments. C. decreasing the cost of capital and reducing net exports. D. depreciating the currency and raising net exports.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Eileen inherits $20,000 from her uncle and deposits the money into an account at Silver Star Bank. Silver Star has a required reserve ratio of 10 percent, meaning it must keep ______ of Eileen’s deposit in reserve.
a. $10,000 b. $2,000 c. $8,000 d. $18,000
In Figure 6.7 at equilibrium, producer surplus is area:
A. A. B. A + B + C. C. E + F + G. D. G.