Consider the Economy of NoTax, Where the Government Expenditure Multiplier

question 45

Multiple Choice

Consider the economy of NoTax, where the government expenditure multiplier is 2.5. If the government desires to shift the AD curve rightward by $5 billion, the correct increase in government expenditure is

• A)$2 billion.
• B)$2.5 billion.
• C)$3 billion.
• D)$7.5 billion.
• E)$8.33 billion.

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Definitions:

T Test

A statistical hypothesis test used to determine if there is a significant difference between the means of two variables.

Two Groups

A basic experimental design involving comparison between two distinct or independent sets of subjects or conditions to determine differences or effects.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values differ from the mean.

Standard Error of Mean

The standard deviation of the sampling distribution of the sample mean, representing how far the sample mean is likely to be from the population mean.