Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?
A) a decrease of more than $80 billion
B) an increase of less than $80 billion
C) an increase equal to $80 billion
D) an increase of greater than $80 billion
E) a decrease of less than $80 billion
E
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Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city
What will be an ideal response?
In which of the following scenarios would a predatory pricing scheme have the greatest chance of success, all else constant?
A) The predatory price is set well below cost, many rivals are likely to enter after the strategy ends, and profits can be recouped only over a relatively long period of time. B) The predatory price is set well below cost, relatively few rivals are likely to enter after the strategy ends, and profits can be recouped in a relatively long period of time. C) The predatory price is set just below cost, many rivals are likely to enter after the strategy ends, and profits can be recouped in a moderate period of time. D) The predatory price is set just below cost, relatively few rivals are likely to enter after the strategy ends, and profits can be recouped in a very short period of time.