The following information is for a closed economy: GDP с S وا $100 $100 $0 $80 200 160 40 80 300 220 80 80 400 280 120 80 500 340 160 80 600 400 200 80 700 460 240 80 Refer to the information. The introduction of $80 billion of government spending would: increase the multiplier from 2.0 to 2.5. O lower the multiplier from 2.5 to 2.0. O have no effect on the size of the multiplier. O increase the multiplier from 2.5 to 3.0.

Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?

Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living. The environment becomes dirtier The crime rate declines A greater variety of goods become available to consumers Infant mortality declines

Without looking at Table 19.7, return to Figure 19.10. If we define a recession as a significant decline in national output, can you identify any post-1960 recessions in addition to the 20082009 recession? (This requires a judgment call.)

Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?

Who in an economy is the big winner from inflation?