If real GDP is $275 billion, consumption is $250 billion, and investment is $30 billion, real GDP
A) will tend to decrease
B) will tend to increase
C) will tend to remain constant
D) equals aggregate expenditures
Answer: B
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The Aggregate Expenditures Model
- Assume that the marginal propensity to save is 0.1 in an economy. To reduce the level of real GDP by $50 billion in that economy to achieve a full employment level of output, it will be necessary to
- A major limitation of the aggregate expenditures model is that it
- If the MPC in an economy is 0.75, government could eliminate a recessionary expenditure gap of $50 billion by decreasing taxes by
- The amount by which an economy's aggregate expenditures must shift upward to achieve full-employment GDP is
- The economy is operating at the full-employment level of output. A depreciation of the dollar will most likely result in
- Other things remaining constant, which would increase an economy's real GDP and employment?
- An increase in the real GDP of an economy will, other things remaining constant,
- Compared with a private closed economy, aggregate expenditures and GDP will
- At the equilibrium level of GDP,
- If saving is greater than planned investment
- When the economy's real GDP exceeds its equilibrium real GDP,
- Which is an injection of spending into the income expenditures stream?
- On a graph, the equilibrium real GDP is found at the intersection of the 45-degree line and the
- If the economy is private and closed to international trade, and government neither taxes nor spends, then real GDP equals
- The premise of the model in this chapter is that the amount of goods and services produced, and therefore the level of employment, depends
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