According to the New Classical Theory, a $50 Billion Increase

question 137

Multiple Choice

According to the new classical theory, a $50 billion increase in government expenditures financed by a $50 billion increase in the budget deficit will

• A) cause real output to expand $200 billion if the marginal propensity to consume is three-fourths.
• B) exert little impact on real output because higher real interest rates will crowd out private spending.
• C) stimulate aggregate demand, causing prices to rise (inflation).
• D) be largely offset by a reduction in private spending because individuals will anticipate higher future taxes.

Recognize the levels of customer relationships in business and the importance of trust and wisdom in these relationships.

Comprehend the role of customer service and its components in sustaining satisfying customer relationships.

Distinguish between different types of relationships (e.g., business friendships, intimate friendships) within professional settings.

Understand the concept and importance of relationship marketing.

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Definitions:

Market Portfolio

A theoretical portfolio consisting of all assets available in the market, weighted by their market capitalization.

Efficient Frontier

A set of optimal portfolios offering the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Human Capital

The economic value of an individual’s skills, knowledge, and experience, considered in the context of their ability to contribute to an economy.

Arbitrage Opportunity

The opportunity to buy an asset at a lower price in one market and sell it at a higher price in another, securing a risk-free profit.