Author Question: Assume the marginal propensity to consume is 0.96 . Firms become pessimistic and decrease investment ... (Read 14 times)

awywial · **on:** Jun 30, 2018

Assume the marginal propensity to consume is 0.96 . Firms become pessimistic and decrease investment spending by 100 billion. Other things equal, real GDP will:
a. decrease by 100 billion.
b. not change.
c. decrease by 96 billion.
d. decrease by 2,500 billion.

Question 2

The difference between M1 and M2 is given by which of the following?
a. M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver.
b. M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
c. M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts.
d. M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts.