Suppose the government spending multiplier is 3.2.Assuming prices are constant,this means that
A) a $1 decline in government spending will raise Real GDP by $3.20.
B) a $1 rise in government spending will raise both total spending and Real GDP (assuming prices are constant) by $3.20.
C) a $1 rise in government spending will raise investment spending by $3.20.
D) a $1 rise in government spending will change interest rates by 3.20 percent compared to what they were before the $1 rise in government spending.
E) none of the above
Correct Answer:
Verified
Q59: Economists who are in favor of smaller
Q84: Suppose that a $10 billion increase in
Q85: Economist A believes that the elasticity of
Q86: Suppose that the government spending multiplier is
Q87: If the (average)tax rate falls by 30%
Q88: A $45 billion reduction in taxes increases
Q90: Economists who view the AS curve as
Q91: Economist A believes that the elasticity of
Q92: Suppose that a $114 billion increase in
Q94: Suppose the tax multiplier is 2.7.Assuming prices
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents