Exam 25: Demand-Side Equilibrium: Unemployment or Inflation

The full employment level of GDP is sometimes referred to as "potential GDP."

In the income-expenditure model, at equilibrium GDP

Why does the aggregate demand curve slope downward?

Using the saving-investment approach, which of the following describes an equilibrium condition of GDP?

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

Each C + I + G + (X − IM) expenditure schedule is drawn assuming a specific

Total output equals total income

The multiplier principle is built on the premise that one person's spending is another person's

Market economies are likely to suffer from recessions and inflation because the government plans all economic activity.

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP, the multiplier is

An increase in investment spending will be multiplied into a larger increase in GDP illustrates the concept of

The multiplier principle explains how

Realistically, the impact of the multiplier is _______ the oversimplified multiplier formula.

The expenditure schedule will shift upward when

In a simple, private economy, suppose that the MPC is 0.8 and investment rises by $20 million. At the new equilibrium, how much will saving have increased?

To avoid a coordination failure, the intentions of savers and investors must be both

For a given price level, a downward shift of the expenditures schedule corresponds to an

The economic impact of the multiplier is ____, and then becomes ____.

The U.S. economy in 2009 was characterized by an excess level of output. This corresponds to a recessionary gap.

Government spending and private sector funding toward new businesses have multiplied effects on GDP.