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

question 65

Multiple Choice

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, the mpc equals 0.9, and potential output (Y*) equals 9,000, then taxes must be increased by approximately ________ to eliminate any output gap.

• A)90
• B)100
• C)111
• D)1,000

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Definitions:

Core Competencies

The main strengths or strategic advantages of a company that give it a competitive edge.

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The aspects of a company's supply chain that are particularly efficient or effective, helping the company to reduce costs, improve delivery times, or enhance service quality.

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The likelihood of previous customers continually choosing the same brand over competitors due to positive experiences or satisfaction.

Value Chain

The full range of activities that businesses go through to bring a product or service from conception to delivery and beyond.