If an Economy Spends 90% of Any Increase in Real

question 67

Multiple Choice

If an economy spends 90% of any increase in real GDP, then an increase in autonomous investment of $1 billion would result ultimately in an increase in equilibrium real GDP of

• A) $1.0 billion.
• B) $1.9 billion.
• C) $10 billion.
• D) $100 billion.

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Definitions:

Industrialize

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods, involving mechanization and an increase in production capacity.

Northern Iron Works

Historic foundries in the Northern United States, significant for their role in the industrialization era.

Separate Peace

An agreement to cease hostilities and settle peace terms independently, often by one party in a wider conflict without the consensus of its allies.

Confederate Nationalism

The patriotic sentiment and cultural identity that developed among the citizens of the Confederate States of America during the American Civil War.