Multiple Choice
Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion which is $250 billion below full-employment GDP. If the marginal propensity to consume (MPC) is 0.60, full-employment GDP can be reached if government spending:
A) decreases by $60 billion.
B) decreases by $100 billion.
C) decreases by $250 billion.
D) is held constant.
Correct Answer:
Verified
Correct Answer:
Verified
Q6: An inflationary gap is the amount by
Q32: Within the Keynesian aggregate expenditures model, which
Q53: Within the framework of the Keynesian Cross
Q56: The size of the spending multiplier depends
Q65: Assume General Motors has decided to build
Q68: In the Keynesian model, the larger the
Q148: Use the aggregate expenditures model and assume
Q151: An increase in government expenditures by $100
Q154: Assume that full-employment real GDP is Y
Q184: When households' marginal propensity to consume (MPC)