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

question 64

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 transfers must be decreased by approximately ________ to eliminate any output gap.

• A)90
• B)100
• C)111
• D)1,000

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Definitions:

Potassium Hydroxide

A strong inorganic base used in various chemical reactions, including neutralization and saponification processes.

Sodium Bicarbonate

A salt composed of sodium and bicarbonate ions, commonly known as baking soda, used widely in baking, cleaning, and as an antacid.

Carbon Dioxide Bubbles

Gas bubbles consisting of carbon dioxide, commonly observed when a carbonated drink is opened or during certain chemical reactions.

Dichlorobutanoic Acid

An organic compound consisting of a four-carbon chain carboxylic acid with two chlorine atoms attached, used in various chemical syntheses and potentially as an intermediate in the production of pharmaceuticals or pesticides.