Suppose that real GDP is initially $13 trillion and the government attempts to increase real GDP to $14 trillion
The marginal propensity to consume is 0.75, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. How much increase in real government spending could lead to the desired level of real GDP?
A) $200 billion
B) $250 billion
C) $500 billion
D) $1 trillion
C)
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Marginal resource cost is defined as the
a. total cost of producing a unit b. total cost of adding one more unit of a resource, other things constant c. cost of adding one more unit of a resource, other things constant d. marginal cost divided by the quantity of a resource e. price of labor
Other things equal, in an open economy, monetary policy to offset an inflationary gap will tend to
a. Lower the exchange value of the dollar and lower net exports. b. Lower the exchange value of the dollar and raise net exports. c. Raise the exchange value of the dollar and lower net exports. d. Raise the exchange value of the dollar and raise net exports.