Suppose that C = Ca + 0.6y and a shock decreases Ca by $50 billion. Assuming there is no government involvement, by how much will equilibrium GDP decrease?
What will be an ideal response?
In this case the multiplier is 1/(1 - 0.6 ) = 2.5. So output will fall by $125 billion.
Economics
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Which of the following is a type of economic analysis?
a. Association b. Resources c. None of these choices is a type of economic analysis. d. Positive
Economics
In the second quarter (three-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that:
A. nominal income declined by more than personal income. B. the price level rose by more than nominal GDP. C. real wages declined by more than real GDP. D. the price level fell by more than real GDP.
Economics