Assume That Initially G Is $100 and Equilibrium Real GDP

question 32

Multiple Choice

Assume that initially G is $100 and equilibrium real GDP demanded is $1,000.If the multiplier is 4 and G increases to $200,real GDP demanded will increase

• A)by $100
• B)by $2,000
• C)by $1,000
• D)to $1,400
• E)to $2,000

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Definitions:

Treasury Bills

Government-issued securities with maturity of up to a year, offered below their nominal value.

Collection Time

The duration it takes for a business to receive payments owed by its customers after a sale has been made.

Collection Float

The time delay between when a check is written and when the funds are actually deducted from the payer's account.

Treasury Bills

Short-term government securities issued at a discount from their face value and maturing at par.