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 less than $80 billion
B) an increase equal to $80 billion
C) an increase of greater than $80 billion
D) an increase of less than $80 billion
E) a decrease of more than $80 billion
A
Economics
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When a price shock has occurred, inflation returns to its pre-shock rate ________
A) in the period following the price shock B) in the period when output has returned to its pre-shock rate C) once the output gap has returned to zero D) only in the long run E) none of the above
Economics
A good synonym for elasticity would be
a. stability b. volatility c. stickiness d. demand e. responsiveness
Economics