Author Question: The balanced-budget multiplier is equal to A) 1. B) the reciprocal of the increase in government ... (Read 40 times)

beccaep · **on:** Jun 30, 2018

The balanced-budget multiplier is equal to

A) 1.
B) the reciprocal of the increase in government expenditures.
C) the percentage increase in taxes.
D) the percentage increase in government expenditures.

Question 2

Suppose that there is no government and no international trade. When C + I is less than the level of real GDP

A) unplanned inventories increase, and real GDP contracts.
B) unplanned inventories decrease, and real GDP expands.
C) real planned investment spending equals real planned saving.
D) unplanned inventories equal zero, and there is no change in the level of real GDP.