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rjkz [21]
3 years ago
7

In 2009 President Obama and Congress increased government spending. Some economists thought this increase would have little effe

ct on output. Which of the following would make the effect of an increase in government expenditures on aggregate demand smaller?
a.
the MPC is small and changes in the interest rate have a small effect on investment

b.
the MPC is small and changes in the interest rate have a large effect on investment

c.
the MPC is large and changes in the interest rate have a small effect on investment

d.
the MPC is large and changes in the interest rate have a large effect on investment
Business
1 answer:
Ksenya-84 [330]3 years ago
3 0

Answer:

The correct answer is option b.

Explanation:

An increase in government expenditure will have a smaller effect on the aggregate demand if the MPC is smaller. This happens because the consumers will save the major share of their income and not consume it if MPC is small.  

This will not increase consumer spending as much as they should. And thus aggregate demand will increase by a small amount.  

The change in aggregate demand will also be smaller if the investment is interest elastic. The government increases spending by borrowing from the loanable funds market.  

This increases the demand for loanable funds. The interest rate, as a result, increases. This increase in interest rate makes borrowing costlier for private investors.  

This further causes the investment expenditure to increase as much as it should. And thus aggregate demand will increase by a small amount as well.

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Answer: Work breakdown structure.

Explanation:

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Answer:

a. The company must have had net income equal to zero in 2009.

Explanation:

If on its 2008 balance sheet, Sherman Books showed a balance of retained earnings equal to $510 million, and on its 2009 balance sheet, the balance of retained earnings was also equal to $510 million; then what is true is that  the company must have had net income equal to zero in 2009.

Retained earnings is the profit amount or net income left over and taken back into the business after it has paid out dividends to its shareholders.

However it is unlikely that the company will pay out the entire amount it earns in a particular year but a percentage of earnings.

In the case of Sherman, it is unlikely that the company made a profit of $200 million and paid out every bit as dividends to shareholders but what is most likely is that there was no profit made for retention in 2009

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3 years ago
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It further states that higher wage will be covered by the extra benefit that the worker will provide with his or her performance.

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