The expenditure multiplier explains how a change in
A. real GDP leads to a change in induced expenditure.
B. induced expenditure leads to a change in real GDP.
C. real GDP leads to a change in autonomous expenditure.
D. autonomous expenditure leads to a change in real GDP.
E. induced expenditure leads to a change in autonomous expenditure.
Answer: D. autonomous expenditure leads to a change in real GDP.
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Recall the Application. If it is not known whether the decrease in price of illegal drugs is primarily due to a change in supply, a change in demand, or equal changes in both, the equilibrium quantity of drugs
A) will increase. B) will decrease. C) will not change. D) may or may not change.
The figure above shows the U.S. demand for labor curve. If there is a simultaneous increase in the nominal wage rate of 10 percent and a 10 percent increase in the price level, there will be a
A) movement upward along the demand for labor curve from a point such as C to a point such as B. B) leftward shift of the demand for labor curve. C) movement downward along the demand for labor curve from a point such as A to a point such as B. D) rightward shift of the demand for labor curve. E) None of the above answers is correct because there is no change in the demand for labor curve.
Shaniq consumes only magazine and CDs. Her income equals $60 per month. CDs are $12 each and magazines are $5 each. What is the equation for her budget line?
A) $60 = Qm + QCD B) $60 = $12Qm + $5QCD C) 12 = -2Qm + 6 D) $60 = 12QCD + 5Qm
Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility? a. Yes, because this individual values good X more than good Y
b. Yes, because this individual values good Y more than good X. c. No. This individual should shift consumption from good X to good Y. d. No. This individual should shift consumption from good Y to good X.