Exam 9: Demand Side Equilibrium Unemployment Or Inflation

Injections include saving and taxes.

Government stabilization policy

A major Internet service provider decides to spend $70 million to purchase new server equipment.If the marginal propensity to consume is 0.8,the eventual change in GDP will be

Figure 9-3 -In Figure 9-3,investment plus net exports equals

Figure 9-1 -In Figure 9-1,the economy is

In a simple macroeconomic model,only one component of expenditures is allowed to change:

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

When spending falls short of output,additional inventories are created.

In a market economy,the decisions about what to produce and how much of each good or service to produce are made by

If the economy automatically tends toward full employment,then government stabilization policy

The recessionary gap is the

The MPC in the U.S.economy has been estimated to be near 0.95.If this is an accurate measure,then the numerical value for the multiplier would be

Producers will change their prices when GDP is at the equilibrium level.

In Table 9-1,the equilibrium level of output is

In the simplified circular flow diagram,leakage can occur when consumers save some income.

When GDP is less than total spending,GDP will fall.

If inventory levels are decreasing,then we should expect business firms to

Figure 9-3 -In Figure 9-3,at $3,000 billion GDP,

A change in the price level will cause a shift in the expenditure schedule.

If firms are experiencing falling inventories,one can expect that firms will cut production.