When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 0.75, a $10 billion increase in investment spending will cause the equilibrium output to rise by:

Cyclical unemployment is the result of the business cycle

a. True b. False Indicate whether the statement is true or false

The economy is in long-run equilibrium when there is a correctly anticipated increase in aggregate demand. According to new classical theory, the price level will __________ and Real GDP will __________

A) fall; rise B) rise; fall C) fall; remain unchanged D) rise; remain unchanged E) remain unchanged; remain unchanged