In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset a recessionary gap resulting from a $1 billion decrease in autonomous consumption, transfers must be:
A. decreased by $1 billion.
B. increased by $1.33 billion.
C. decreased by $1.33 billion.
D. increased by $1 billion.
Answer: B
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An economic model is a realistic depiction of the operation of the economy
a. True b. False Indicate whether the statement is true or false
If producing a good generates pollution (a negative externality), from a social perspective
a. The price will be too low and the quantity produced will be too low b. The price will be too low and the quantity produced will be too high c. The price will be too high and the quantity produced will be too low d. The price will be too high and the quantity produced will be too high e. The price will be too low but the quantity produced will be correct
If the marginal propensity to consume (MPC) is positive and less than one, an increase in disposable income will _____.
Fill in the blank(s) with the appropriate word(s).
Use the following table showing the consumption schedule for a hypothetical economy to answer the next question.All figures are in billions of dollars.RGDPConsumption$600$590610598620606630614640622650630660638If gross investments were fixed at $16, taxes were zero, government purchases of goods and services were zero, and net exports were zero, then equilibrium real GDP would be $630 initially. If government purchases were then raised from $0 to $4, other things constant, then the equilibrium real GDP would become
A. $630. B. $660. C. $640. D. $650.