Author Question: A reduction in business expectations, combined with the imposition of new tariffs by major trading ... (Read 12 times)

Mimi · **on:** Jun 30, 2018

A reduction in business expectations, combined with the imposition of new tariffs by major trading partners, would have what effect on aggregate demand?
a. AD would increase.
b. AD would decrease.
c. AD would stay the same.
d. AD could either increase or decrease, depending on which change was of a greater magnitude.

Question 2

Assume that potential GDP is 200 billion and the multiplier equals 5 . The recessionary gap is 10 billion. What is the actual level of equilibrium income?
a. 200 billion
b. 150 billion
c. 100 billion
d. 80 billion
e. 50 billion