The expansion path shows the lowest cost combinations of inputs for producing different levels of output

The cost of inflation to society includes

A) unpredictable changes in the value of money. B) higher interest rates paid by borrowers. C) higher interest rates paid by the government on its debt. D) the lost spending when people do not have enough money.

Which of the following best explains the multiplier effect as a result of a $100 million increase in govt spending on highways?

A. More money must be printed to fund govt spending. Money supply increases, interest rates decrease, consumption increases, investment spending increases. B. Change in spending will cause an increase in real GDP. Govt tax revenue increases so govt spending increases. C. Govt spending creates a demand for domestically produced goods. Income increases, consumption increases, demand increases D. Change in govt spending causes an increase in supply of jobs and stimulates production of domestically produced goods/services.