If the Economy Is Already Producing at Its Potential,_____

question 64

Multiple Choice

If the economy is already producing at its potential,_____.

• A)the spending multiplier equals 1/(1 - MPC)in the long run
• B)the spending multiplier is less than 1/(1 - MPC)in the long run
• C)the spending multiplier is more than 1/(1 - MPC)in the long run
• D)the spending multiplier equals zero in the long run
• E)the aggregate demand curve is horizontal

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Definitions:

Bond Interest Paid

The amount paid by the issuer of a bond as interest to the bondholders, usually expressed as a fixed percentage of the principal.

Discount

A reduction from the usual cost of something or the act of lowering the price.

Premium

The amount by which the price of something, especially a financial instrument, exceeds its principal or face value.

Unamortized Premium

The portion of the bond premium that has not yet been expensed to interest expense over the bond's life.