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Author Question: A 0.2 trillion increase in government purchases increases the quantity demanded by 1.0 trillion, ... (Read 35 times)

gbarreiro

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on: Jun 30, 2018
A 0.2 trillion increase in government purchases increases the quantity demanded by 1.0 trillion, price level remaining constant. This additional spending reflects the _____ effect.
 a. recessionary
 b. expansionary
 c. simple spending multiplier
  d. income
 e. substitution

Question 2

What are the seven short run cost calculations? How are they related?


coyin

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Reply #1 on: Jun 30, 2018
Answer to Question 1

c

Answer to Question 2

The seven short run cost calculations are: TC, TFC, TVC, MC, ATC, AFC, and AVC. Note that TC = TFC + TVC; ATC = AFC + AVC. MC = (Change in TC) / (Change in Q) = (Change in TVC) / (Change in Q); ATC = TC/Q; AVC = TVC/Q; AFC = TFC/Q.


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