Suppose There Is a $200 Billion Increase in Government Spending

question 279

Multiple Choice

Suppose there is a $200 billion increase in government spending. We know that this increase in government spending will cause which of the following to occur?

• A)an increase in equilibrium real GDP and an increase in the multiplier.
• B)an increase in equilibrium real GDP and a reduction in the multiplier.
• C)an increase in equilibrium real GDP and no change in the multiplier.
• D)equilibrium real GDP will increase by exactly $200 billion.

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Definitions:

Cricoid

A ring-like cartilage located at the top of the trachea and below the thyroid cartilage, forming the back part of the larynx and providing attachment for muscles involved in opening and closing the airway.

Glottis

The opening between the vocal cords in the larynx, crucial for producing vocal sounds.

Positive Message

Communication that conveys favorable, optimistic, or encouraging information or sentiments.

News Release

An official statement issued to newspapers, magazines, and other media for the purpose of providing information, an announcement, or making an official statement.