13)Consider the following economy.

C = 1000 + 0.8YD

T = 0.25Y

I = 325

G = 225

X = 450

M = 0.1Y

If investment increases to 425, equilibrium GDP...

a.Increases by 850.

b.Increases by 2125.

c.Increases by 200.

d.Decreases because the multiplier is negative.

14)Central banks set the interest rate to control the...

a.Inflation rate.

b.Aggregate supply curve.

c.Spending multiplier.

d.Budget deficit.

15)Endogenous growth theory is associated with the Nobel Prize winner...

a.John Kenneth Galbraith.

b.John Nash.

c.Paul Romer.

d.John Maynard Keynes.