Exam 25: Demand-Side Equilibrium: Unemployment or Inflation

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

When the price level in the United States rises, then net exports should

Investment increases by $200 million and the value of MPC is 0.75. What would be the total increase in spending?

Two variables that affect the slope of the aggregate demand curve are

What is meant by the concept of a "coordination failure" in macroeconomics?

The U.S. fiscal stimulus in 2009 did not increase GDP substantially because

Government stabilization policy

The expenditure schedule and the aggregate demand curve show much the same thing, with one crucial difference-the price level. How does the price level affect the two schedules?

The equilibrium level of GDP is always accompanied by full employment and stable prices.

The actual multiplier for the U.S. economy is estimated to be

The formula for the multiplier can be written as change in

U.S. exports

A recessionary gap exists when potential GDP

The effect throughout the entire economy of one firm's increase in spending will be

Inventory reductions caused by strong demand are signals to retailers to order more products.

John Maynard Keynes concluded that investment spending is not determined by

For a simple economy (no government, no foreign sector), the condition for equilibrium can be stated correctly as

When spending is less than production, inventories are higher than what producers expected.

Define the terms recessionary gap and inflationary gap. Why do they occur?

Which one of the following could cause a recessionary gap?