Author Question: Assume that people experience a one-time 50 unit increase in their consumption (i.e. the intercept ... (Read 79 times)

melina_rosy · **on:** Jun 30, 2018

Assume that people experience a one-time 50 unit increase in their consumption (i.e. the intercept of the consumption function increases by 50). In this case

a. equilibrium income will rise by 50 units times the investment multiplier.
b. equilibrium income will rise by 50 units.
c. equilibrium income will rise by 50 units times the tax multiplier.
d. equilibrium income will not change because this increase is temporary.

Question 2

In the event of deflation, or negative inflation, then

a. real GDP is always lower than nominal GDP.
b. real GDP is always lower than nominal GDP after the base year.
c. real GDP is always lower than nominal GDP.
d. real GDP is always higher than nominal GDP before the base year.
e. None of the above