In a Simple Macro Model with Government and Demand- Determined

question 22

Multiple Choice

In a simple macro model with government and demand- determined output, to raise equilibrium national income by $100 billion, G must be

• A)raised by $100 billion divided by the simple multiplier.
• B)raised by $100 billion times the simple multiplier.
• C)raised by $100 billion.
• D)lowered by $100 billion divided by the simple multiplier.
• E)lowered by $100 billion times the simple multiplier.

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Definitions:

Deficit

A financial situation where expenses exceed income or imports exceed exports.

National Debt

The total amount of money that a country's government has borrowed, by various means, to fund its expenditures beyond what it collects in taxes.

Decreasing Rate

A situation where the rate or speed of a process or value is diminishing over time.

Full Employment GDP

An economic condition where all available labor resources are being used in the most efficient way possible, reflecting the highest level of economic output.