Suppose Congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?
A) Real equilibrium GDP will fall.
B) Real equilibrium GDP will rise.
C) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium value.
D) There will be no change in real equilibrium GDP.
B
Economics
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In the Keynesian DMP model
A) There is a fiscal multiplier. B) The government post vacancies in the labor market. C) There is no unemployment. D) There can be more than one wage consistent with equilibrium.
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The following interactions between binary and continuous variables are possible, with the exception of
A) Yi = ?0 + ?1Xi + ?2Di + ?3(Xi × Di) + ui. B) Yi = ?0 + ?1Xi + ?2(Xi × Di) + ui. C) Yi = (?0 + Di) + ?1Xi + ui. D) Yi = ?0 + ?1Xi + ?2Di + ui.
Economics