If Short-Run Equilibrium Output Equals 10,000, the Income-Expenditure Multiplier Equals

question 109

Multiple Choice

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,000, then government purchases must ________ to eliminate any output gap.

• A)increase by 100
• B)decrease by 100
• C)increase by 1,000
• D)decrease by 1,000

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Definitions:

Indian Problem

A term that historically referred to the challenge faced by European settlers and later the United States government in dealing with the indigenous populations of North America.

Indian Removal Act

A law passed in 1830 that authorized the forced relocation of Native American tribes from their ancestral lands in the southeastern United States to areas west of the Mississippi River.

Georgia

A state in the southeastern United States known for its diverse geography, ranging from mountains to beaches, and its rich history, including its role as a Confederate state during the Civil War and as a center of the civil rights movement.

Cherokee

A Native American people originally from the southeastern United States, known for their rich culture and history.