What is a recessionary gap?
Fiscal Policy and the Multiplier Practice (1 of 2)- Macro Topic 3.8

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Business
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11th Grade - University
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Hard
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5 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When current output is less than desired output
When current output exceeds desired output
When unemployment is at its lowest
When inflation is higher than expected
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If the marginal propensity to consume is 0.5, what is the spending multiplier?
1
2
3
4
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How much government spending is needed to close a 40 billion dollar gap if the spending multiplier is 2?
40 billion dollars
10 billion dollars
20 billion dollars
30 billion dollars
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the spending multiplier when the marginal propensity to consume is 0.8?
5
3
2
4
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why does a higher marginal propensity to consume reduce the amount of government spending needed to close the gap?
Because people save more
Because people spend more
Because the gap is smaller
Because the government spends less
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