Suppose Aggregate Output Is Demand- Determined

question 85

Multiple Choice

Suppose aggregate output is demand- determined. If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending, then equilibrium income will and the marginal propensity to spend must equal .

• A)increase by $40 billion; 0.75
• B)decrease by $10 billion; 0.25
• C)increase by $10 billion; 4.0
• D)increase by $40 billion; 0.25
• E)decrease by $40 billion; 0.75

Understand the basic principles of monetarism and its approach to managing the economy.

Analyze the concept of rational expectations and its implications for economic policy.

Evaluate the effectiveness of monetary and fiscal policies in influencing economic outcomes.

Comprehend the differences between Keynesian and monetarist views on economic stability and policy interventions.

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Definitions:

Processing Time

The duration required to complete a particular process or activity, often used in manufacturing and operational analysis.

Unit-level Activities

Activities in cost accounting that vary with the number of units produced, such as operating machinery for each unit.

Departmental Unit

A division within an organization with specific responsibilities, often based on function, product line, or geographical area.

Overhead Costs

Expenses related to the operation of a business that are not directly associated with the production of goods or services, such as rent and utilities.