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:

General Journal

A comprehensive journal used in bookkeeping to record all types of accounting transactions before their transfer to specific accounts in the ledger.

Predetermined Rate

A rate established before the start of a period for the purpose of applying overhead costs to products or services, based on estimated costs.

Direct Labor Hours

The total time workers spend producing goods or providing services that are directly associated with the production costs.

Manufacturing Overhead-Control

An account that records the actual overhead costs incurred in the manufacturing process, differing from allocated overhead.