Author Question: Suppose there is a 200 billion increase in government spending. We know that this increase in ... (Read 61 times)

jrubin · **on:** Jun 30, 2018

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

Question 2

This Application emphasizes the importance of

A) economic incentives. B) wealth distribution.
C) literacy rates. D) none of the above.