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If an Economy Experiences a $0

question 73

Essay

If an economy experiences a $0.8 trillion increase in investment resulting in an increase in real GDP from $10 trillion to $12 trillion
a. what is the change in equilibrium expenditure
b. what is the change in autonomous expenditure
c. what is the multiplier
d. how would an increase in the marginal tax rate effect the multiplier


Definitions:

Zero-Coupon Bonds

Bonds that do not pay interest during their lifetime but are issued at a discount to their face value, thus generating profit at maturity.

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or current market value.

Minimum Number

The lowest quantity or amount that is allowed, required, or desired.

Coupon Rate

The percentage rate of interest a bond yields annually, based on its nominal value.

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