The government expenditure multiplier is the effect of a change in government expenditure on goods and services on _____.
a) Aggregate demand
b) Real GDP
c) Consumption
d) Aggregate supply
Option b.
Government expenditure multiplier measures the impact of change in government expenditure on real GDP of the economy.
The government expenditure multiplier is the effect of a change in government expenditure on goods and...
22. Why is the multiplier for a change in taxes smaller than for a change in spending? a. A change in taxes has no effect on aggregate demand, only on aggregate supply. b. A change in taxes directly affects government spending as well, lowering the multiplier. c. A change in taxes affects spending directly, but at a slower rate than spending does. d. A change in taxes affects disposable income and then consumption rather than spending directly....
Suppose that the government increases its expenditure on goods and services by $100billion and pays for these goods and services by raising autonomous taxes by $100billion. What is the effect on aggregate demand and real GDP of each change individually and of the two combined?
Suppose government spending decreases. Beginning in a long-run equilibrium, what would be the long-run effect on the goods and services market? Group of answer choices A. GDP Deflator increases, Real GDP decreases B. GDP Deflator decreases, Real GDP decreases C. GDP Deflator decreases, no change in Real GDP D. GDP Deflator increases, no change in Real GDP An increase in the amount of technology will shift which curve(s)? Group of answer choices A. Aggregate demand and short-run aggregate supply B....
The table shows real? GDP, Y?, consumption? expenditure, C?, ?investment, I?, government expenditure on goods and? services, G?, ?exports, X?, ?imports, M?, and aggregate planned? expenditure, and AE?, in millions of dollars. Taxes are constant. If investment crashes to? $0.55 trillion but nothing else? changes, what is equilibrium expenditure and what is the? multiplier? Homework: Chapter 14 Save Score: 0 of 1 pt 17 of 25 (19 complete) HW Score: 76%, 19 of 25 pts Chapter Problem5 Question Help *...
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...
5. In the Keynesian model which of the following would be most likely to have the largest impact on aggregate demand a. an increase in the money supply b. a change in government expenditure c. a change in investment expectations d. both a and c e. both b and c 6. In the Keynesian theory of liquidity demand and the interest rate which of the following occurs during excess supply of money. a. individuals sell bonds, driving interest rates down...
Question#1A The following are details of the expenditure of a very small economy. All the autonomous expenditures are given in $ thousand. C = 200 + 0.8Yd I = 10 G = 50 T = 0.05Y X = 40 M = 0.1Y Derive the aggregate expenditure function, and calculate the equilibrium real GDP Determine the expenditure multiplier using aggregate expenditure function slope value Question#1B Suppose the slope of the AE curve is 0.80. i) What is the expenditure multiplier? ii) Everything else the same, by how much does equilibrium aggregate expenditure...
Why is the multiplier for a change in taxes smaller than for a change in spending? a. A change in taxes has no effect on aggregate demand, only on aggregate supply. b. A change in taxes directly affects government spending as well, lowering the multiplier. c. A change in taxes affects spending directly, but at a slower rate than spending does. d. A change in taxes affects disposable income and then consumption rather than spending directly. e. All of the...
Explain the change in aggregate demand when: a. Government expenditure on goods and services increases by $100 Billion b.Taxes are increased by $100 Billion c. Both 1 and 2 occur simultaneously
5. Will the multiplier effect on GDP be different when these events occur? Why or why not? a) Investment rises by 100; c) Exports rise by 100, b)Consumption rises by 100 at each level of GDP d)Government spending rises by 100 6. In an economy with no government sector, investment is 1,000, net exports are 100, and the consumption schedule is 3,000 3,500 4,000 4,500 5,000 5,500 2,100 2,500 2,900 3,300 3,700 4,100 Calculate the aggregate demand schedule, and find...