Consider the Simplest Macro Model with Demand-Determined Output

question 107

Multiple Choice

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million.The marginal propensity to spend in this economy is 0.75.What is the increase in expenditure in this economy during the second round of spending?

• A)$25 million
• B)$100 million
• C)$400 million
• D)$75 million
• E)$500 million

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Definitions:

Open Shop

When no one is forced to join a union even though the union represents all the workers in contract negotiations.

Collective Bargaining

The method in which employers and employee representatives engage in discussions to reach agreements on setting salaries, work conditions, and various elements of employee benefits and rights.

Collective Bargaining

Collective Bargaining refers to the process by which workers, through their unions, negotiate contracts with their employers to determine their terms of employment, including pay, benefits, hours, leave, job health and safety policies, and more.

Taft-Hartley Act

A federal legislation passed in 1947 that limits the actions and authority of labor unions within the United States.