If the spending multiplier is greater than 1.0, a $200 billion increase in autonomous investment will cause:
a. equilibrium investment to increase by less than $200 billion
b. equilibrium investment to decrease by more than $200 billion.
c. equilibrium real GDP demanded to increase by more than $200 billion.
d. equilibrium real GDP demanded to decrease by less than $200 billion.
e. equilibrium saving to decrease by more than $200 billion.
c
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According to the BEA, in the second quarter of 2012 nominal GDP rose by 3.3 percent and real GDP rose by 1.7 percent. The difference between the change in nominal GDP and the change in real GDP could be explained by
A) an increase in prices of final goods and services produced. B) a decrease in prices of final goods and services produced. C) an increase in quantity of final goods and services produced. D) a decrease in quantity of final goods and services produced.
The difference between the Baumol-Tobin formulation of the demand for money and the Keynesian-Baumol formulation is that
A) the speculative demand is a function of income. B) the transaction demand is a function of interest rates as well as income. C) the transaction demand is a function of wealth. D) Both B and C are correct.