If the Spending Multiplier Is Greater Than 1

question 115

Multiple Choice

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause:

• A)equilibrium investment to increase by less than $200 billion.
• B)equilibrium investment to decrease by more than $200 billion.
• C)equilibrium real GDP demanded to increase by more than $200 billion.
• D)equilibrium real GDP demanded to decrease by less than $200 billion.
• E)equilibrium saving to decrease by more than $200 billion.

Understand the dynamics of international trade relations and negotiations.

Understand the principles and benefits of international trade.

Grasp the concepts of absolute and comparative advantage and their application in international trade.

Analyze the effects of tariffs, quotas, and other trade barriers on global trade and domestic markets.

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Definitions:

Inequality

A relation that holds between two values when they are different, represented by symbols that show if one value is less than, greater than, or not equal to another value.

Real Number Line

A line that represents all real numbers in a continuous sequence, with positive numbers to the right of zero and negative numbers to the left.

Real Line

A one-dimensional space consisting of all the real numbers, visualized as a straight line where each point corresponds to a unique real number.

Inequality

A mathematical statement that shows the relationship between two expressions that are not equal, using symbols such as <, >, ≤, or ≥.