Author Question: If the economy is already producing at its potential, _____. a. the spending multiplier equals 1/(1 ... (Read 91 times)

Kikoku · **on:** Jun 30, 2018

If the economy is already producing at its potential, _____.
a. the spending multiplier equals 1/(1 - MPC) in the long run
b. the spending multiplier is less than 1/(1 - MPC) in the long run
c. the spending multiplier is more than 1/(1 - MPC) in the long run
d. the spending multiplier equals zero in the long run
e. the aggregate demand curve is horizontal

Question 2

When calculating gross domestic product (GDP), double counting can be avoided by:
a. taxing corporate income.
b. adding all income taxes to GDP.
c. calculating GDP using the income as well as the expenditure method.
d. adding the value of exports to GDP and subtracting the value of imports.
e. summing the value added at each stage of production.