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:

Anthill

A mound formed above the ground by ants as they excavate tunnels for their nests.

Proxy Variable

A variable used in place of another variable that is not directly measurable or accessible, often because of practical limitations.

Happiness

Happiness is a state of well-being and contentment characterized by emotions ranging from contentment to intense joy; it reflects subjective evaluations of life satisfaction and emotional experiences.

External Validity

The extent to which the results of a study can be generalized to other situations and to other people.