In order to analyze the factors that determine the quantity of real GDP demanded, in the aggregate expenditure model we assume that
A) real GDP does not change.
B) the unemployment level is fixed.
C) the inflation rate is assumed to equal the natural unemployment rate.
D) the natural rate of unemployment is fixed.
E) the price level is fixed.
E
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The government wishes to close an inflationary gap by reducing national income by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. decreasing government spending by $400 billion and increasing taxes by $400 billion b. decreasing government spending by $160 billion and decreasing taxes by $100 billion c. decreasing government spending by $40 billion and decreasing taxes by $40 billion d. decreasing government spending by $80 billion and keeping taxes the same e. doing absolutely nothing to the economy
Suppose Szmul Hecht's farm A is 10 miles from the marketplace, while Frantisek Bass's farm is twice as far away. Ceteris paribus, We know then that the
a. present value of Hecht's farm is lower than the present value of Bass's farm b. differential rent Hecht receives is greater than the differential rent Bass receives c. differential rent Hecht receives is less than the differential rent Bass receives d. location rent Hecht receives is less than the location rent Bass receives e. present value of Hecht's farm is higher than the present value of Bass's farm