The reason that an increase in autonomous spending leads to an even greater increase in equilibrium level of output is that
A) as firms increase output to meet demand, income increases, and this induces more consumption spending
B) the multiplier increases with an increase in autonomous spending
C) prices rise with increased output and this raises nominal GDP
D) people save less as their income increases
E) there is unwanted inventory accumulation, leading firms to lower prices and encouraging increased consumer spending
Correct Answer:
Verified
Q31: If total autonomous spending is A? =
Q32: Assume an economy with no foreign sector,
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Q34: In a model with income taxes, an
Q35: If the consumption function is defined as
Q37: Assume the consumption function is of the
Q38: A decrease in the income tax rate
Q39: Assume an economy with no foreign sector,
Q40: If the savings function is of the
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