Exam 25: Demand-Side Equilibrium: Unemployment or Inflation

An increase in autonomous consumption has the same equilibrium effect as a(n)

Recessions and depressions are the principal examples of

When businesses are cutting back production, then it is probably true that

If businesses spend an additional $150 billion for investment projects in 2010, what will be the impact on national income (Y) if the multiplier is 2?

In the 2007-2009 period, the expenditure level in the United States intersected the 45° line below potential GDP, causing

Coordination failures occur when

In the standard 45° line expenditure model, the C + I line and the C line are parallel because

If the MPC is 0.67, then the oversimplified multiplier is

The equilibrium level of GDP is the level at which

In the real world, the actual multiplier is ____ the simplified multiplier.

Government stabilization policy would be unnecessary if the economy automatically gravitated toward

If the government increases defense spending by $1 billion and the MPC is 0.8, how much additional spending will occur in the third "round" of spending?

Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending?

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

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

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

Investment spending might be larger when GDP is higher. Such added investment as GDP rises is called

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

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

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