Which of the following is true when the government attempts to move the economy to full employment by increasing spending?
A) The desired stimulus should be set by the AD shortfall multiplied by the multiplier.
B) It must initially spend more than the GDP gap if the aggregate supply curve is upward-sloping.
C) The total change in spending includes both the new government spending and the subsequent increases in consumer spending.
D) The desired stimulus should be set by the multiplier divided by the AD shortfall.
Correct Answer:
Verified
Q20: If aggregate demand increases by the amount
Q21: To eliminate an AD shortfall of $100
Q22: In a diagram of aggregate demand and
Q23: The balanced budget multiplier says that
A)An increase
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Q26: If the government purchases multiplier is 4
Q27: Assume the MPC is 0.75.To eliminate an
Q28: The total change in aggregate spending generated
Q29: Which of the following formulas is used
Q30: A tax cut
A)Directly decreases the disposable income
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