The "fiscal multiplier" is the ripple effect of subsequent:
A. increases in spending following an initial increase in government spending.
B. increase rate changes following a change to the federal funds rate.
C. increases in lending following an initial increase in bank reserves.
D. private-sector layoffs following an initial layoff in the public sector.
Answer: A. increases in spending following an initial increase in government spending.
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Indicate whether the statement is true or false
Pat can either drive to work, which takes half an hour and uses $1.50 worth of gas, or take the bus, which takes an hour and costs $1.00. How should Pat get to work?
A. Pat should take the bus if saving half an hour is worth $0.50 or more. B. Pat should drive if saving half an hour is worth $0.50 or more. C. Pat should drive because it saves half an hour relative to taking the bus. D. Pat should take the bus because it costs $0.50 less than driving.