Exam 26: Demand-Side Equilibrium: Unemployment or Inflation

Assume that the MPC is 0.80 and investment rises by $50 million.How much additional saving will this generate in the second round of spending?

Which of the following shows the relationship between national income (GDP) and total spending?

Total output equals total income

One of the main conclusions of Keynes in The General Theory of Employment, Interest, and Money is that the economy

-In Table 9-1, inventories are being depleted as long as output is below

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

If investment spending depends on GDP, this is called induced investment.

A decrease in autonomous consumption would have the same effect on the expenditures schedule as a(n)

If total spending exceeds total output, then

Figure 9-3 -In Figure 9-3, equilibrium GDP is

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

When demand for goods and services is high, firms are more likely to hire more workers.

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

The aggregate demand curve

John Maynard Keynes concluded that investment spending is determined by

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

If the expenditure schedule must be shifted upward to reach potential GDP, then the economy is experiencing a(n)

Total expenditures can be written as C + I + G + (X − IM).

The formula for the multiplier can be written as change in

Workers in a nearby pizza restaurant may indirectly enjoy income increases from a nearby construction process.