Consider the Simplest Macro Model with Demand-Determined Output

question 52

Multiple Choice

Consider the simplest macro model with demand-determined output.Other things being equal,the ________ the value of the simple multiplier,the ________ stable is real GDP in response to shocks to autonomous spending.

• A)larger; more
• B)larger; less
• C)smaller; more
• D)smaller; less
• E)both B and C are correct

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Definitions:

Liquidated Damages

A pre-determined amount of money agreed upon in a contract, paid as compensation for failure to perform certain obligations by the stipulated deadline.

Earthquake

A sudden and violent shaking of the ground, sometimes causing great destruction, as a result of movements within the earth's crust or volcanic action.

Prohibitively Expensive

Costs that are so high they discourage or prevent an individual or entity from purchasing a service or product or undertaking an action.

Impossibility of Performance

A legal doctrine that releases parties from their contractual obligations when an event occurs that makes performance objectively impossible.