Suppose the Economy's Multiplier Is 2

question 22

Multiple Choice

Suppose the economy's multiplier is 2. Other things equal, a $25 billion decrease in government expenditures on national defense will cause equilibrium GDP to

• A) decrease by $50 billion.
• B) decrease by $150 billion.
• C) remain unchanged since spending on military goods is unproductive and usually wasteful.
• D) decrease by $25 billion.

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Definitions:

Selection System

The process by which organizations identify, assess, and choose candidates for employment.

Real Benefit

The actual advantageous impact received from a product, service, or action, beyond any superficial gains.

Internal Recruiting

Is the process of looking inside the organization for existing qualified employees who might be promoted to higher-level positions.

Stagnation

A period of slow economic growth or decline, often marked by high unemployment and underused production capacity.