Suppose GDP in the United States were to fall by $8 billion. You would expect to see an immediate reduction in disposable income of
A) something over $8 billion depending on the size of the multiplier.
B) something under $1 billion if there were no response by the Federal Reserve Board.
C) some insignificant amount because demand from abroad would fill the gap in aggregate demand.
D) approximately $6 billion.
E) none of the above.
Correct Answer:
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