Foreign repercussions of changes in domestic spending may cause:
a. the GDP gap to be larger than the recessionary gap.
b. the equilibrium income to increase by an amount equal to the change in net exports.
c. the actual spending multiplier to be larger than the reciprocal of the marginal propensity to save plus the marginal propensity to import.
d. equilibrium income to rise by a smaller amount than evidenced by the multiplier effect of autonomous spending increase.
e. the real GDP to be larger than potential GDP.
c
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DVD players have become more abundant, and cheaper, over the past few years. Explain the decline in DVD player prices
A) DVD manufacturers have become less interested in trying to maximize their profits. B) The demand curve for DVDs has shifted to the left. C) The supply curve for DVDs has shifted to the right. D) The supply curve for DVDs has shifted to the left.
Which of the following is NOT a TRUE statement about perfectly competitive and monopolistically competitive firms?
A) Both monopolistically competitive and perfectly competitive firms have perfectly elastic demands. B) In the long run, only monopolistically competitive firms have excess capacity. C) Perfectly competitive firms produce at their efficient scale. D) There are a large number of firms in both monopolistically competitive and perfectly competitive markets.
Even economists have no single, precise definition of money because
A) money supply statistics are a state secret. B) the Federal Reserve does not employ or report different measures of the money supply. C) the "moneyness" or liquidity of an asset is a matter of degree. D) economists find disagreement interesting and refuse to agree for ideological reasons.
If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $15 billion increase in government expenditures would shift the aggregate demand curve right by
a. $60 billion, but the effect would be larger if there were an investment accelerator. b. $60 billion, but the effect would be smaller if there were an investment accelerator. c. $45 billion, but the effect would be larger if there were an investment accelerator. d. $45 billion, but the effect would be smaller if there were an investment accelerator.