The multiplier can be calculated by dividing:
A. The initial change in spending by the change in real GDP
B. The change in real GDP by the initial change in spending
C. One by one minus the marginal propensity to save
D. One by one minus the marginal propensity to invest
B. The change in real GDP by the initial change in spending
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Whatever form and level of security we choose, determined by whatever sets of values we hold, carries a price tag that can be compared with those for alternative security systems
Indicate whether the statement is true or false
If the multiplier is 4 and real GDP increases by $520 billion, the increase in investment spending must have been
a. $110 billion. b. $120 billion. c. $130 billion. d. $140 billion.
Some nations benefit absolutely from abandoning their monetary policy and control of their currency because:
A) their monetary policy permitted high inflation under pressure from political interests that would not be present under a common currency arrangement. B) they did not have sufficient currency in their own nation to support a higher GDP. C) they had a strong currency, which hurt their exports. D) the central bank would keep the money supply under tight control, which is not good for economic expansion and jobs.
The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to:
A. fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP. B. fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP. C. rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP. D. rise, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.