In the short run Keynesian model where the marginal propensity to consume is 05

# In the short run keynesian model where the marginal

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111.In the short-run Keynesian model where the marginal propensity to consume is 0.5, to offset an expansionary gap resulting from a \$2 billion increase in autonomous consumption, government purchases must be: A. increased by \$2 billion.B.decreased by \$2 billion.C. increased by \$4 billion.D. decreased by \$4 billion. AACSB: Analytical Skills Blooms: Understanding Frank - Chapter 21 #111

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Learning Objective: 21-04 Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income expenditure multiplier. Section: Stabilizing Planned Spending: The Role of Fiscal Policy
112.If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,500, then government purchases must ________ to eliminate any output gap. AACSB: Analytical Skills Blooms: Application Frank - Chapter 21 #112 Learning Objective: 21-04 Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income expenditure multiplier. Section: Stabilizing Planned Spending: The Role of Fiscal Policy

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113.If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 5, potential output (Y*) equals 10,500, then government purchases must ________ to eliminate any output gap. AACSB: Analytical Skills Blooms: Application Frank - Chapter 21 #113
Learning Objective: 21-04 Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income expenditure multiplier. Section: Stabilizing Planned Spending: The Role of Fiscal Policy 114.In the basic Keynesian model a decrease in government purchases: AACSB: Analytical Skills Blooms: Understanding Frank - Chapter 21 #114 Learning Objective: 21-04 Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income expenditure multiplier. Section: Stabilizing Planned Spending: The Role of Fiscal Policy

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115.In the basic Keynesian model an increase in government purchases: A. reduces short-run equilibrium output. B.increases short-run equilibrium output. C. reduces potential output. D. increases potential output. AACSB: Analytical Skills Blooms: Understanding Frank - Chapter 21 #115 Learning Objective: 21-04 Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income expenditure multiplier. Section: Stabilizing Planned Spending: The Role of Fiscal Policy

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• Fall '14
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