Consider a Simple Macro Model with a Constant Price Level

question 81

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.If the simple multiplier is 3 and there is a $2 billion increase in autonomous investment spending,then the equilibrium level of income will increase by

• A)$1.2 billion.
• B)$2 billion
• C)$3 billion.
• D)$4.5 billion.
• E)$6 billion.

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Definitions:

Traceable Fixed Expense

Fixed expenses specifically attributable to a particular section of a business or an operation.

Price Reduction

A strategy involving the lowering of the selling price of products or services, typically to attract more customers or respond to market competition.

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific cost center or business segment.

Net Operating Income

The total profit of a company after subtracting operating expenses but before deducting taxes and interest.