The Next Questions Refer to the Following Simple Keynesian Model

question 60

Multiple Choice

The next questions refer to the following simple Keynesian model.
Suppose C = 1000 + .9Y, G = 400, I = 100, (X - IM) = 0, and there are no income taxes.
-If government purchases increase by 100,equilibrium GDP will

• A) rise by 25%
• B) rise by a factor of 10
• C) rise by 90
• D) rise by 100
• E) rise by 1,000

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Definitions:

Tachometer

An instrument used to indicate shaft speed.

Engine Rpm

Revolutions per minute of an engine; a measure of the engine's speed.

Double Filament

A double filament refers to a bulb or lamp that contains two filaments, allowing for two levels of brightness or function, such as in a car's headlight for both high and low beams.

Headlight System

A vehicle's lighting assembly designed to illuminate the road ahead during nighttime or inclement weather conditions.