The graph above indicates equilibrium E for a close economy without government spending. If the addition of government spending results in equilibrium F, which of the following is true?
A) Government spending is $300 and the multiplier is 5
B) Government spending is $100 and the multiplier is 5
C) Government spending is $100 and the consumption increase by $500
D) Government spending and GDP increase by $500 each
E) Consumption and GDP increase by $500 each
Ans: B) Government spending is $100 and the multiplier is 5
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Some economists and policymakers who are in favor of government-provided health care believe that providing health care will generate
A) more adverse selection. B) additional moral hazard. C) positive externalities. D) greater asymmetric information.
Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.Employee-Hours Per DayOutput Per Day0014048091201516023200 When the firm uses 9 employee-hours per day, its total revenue each day is:
A. $160. B. $18. C. $120. D. $240.