Macroeconomics: Goods Market and Equilibrium Output
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Macroeconomics and Goods Market Equilibrium
- Which of the following types of government spending is included when calculating GDP?
Spending at the federal, state, and municipal levels. - Which of the following events will cause a reduction in equilibrium output?
An increase in the marginal propensity to save, an increase in taxes, or a reduction in the marginal propensity to consume (all of the above). - Based on our understanding of the paradox of saving, we know that a reduction in the desire to save will cause:
An increase in equilibrium GDP. - Based on our understanding of consumption and saving, we know that the marginal propensity to consume and the marginal propensity to save must:
Sum to exactly one. - Suppose there is an increase in autonomous consumption.