Consider the above figure. At an income of $60 we would expect saving to be equal to
A) $60.
B) $40.
C) $10.
D) $0.
Ans: D) $0.
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When firms reduce their target level of inventories, planned investment ________, and equilibrium expenditure and real GDP ________
A) rises; increase B) falls; remains the same C) rises; decrease D) falls; decrease E) falls; increase
Taxing some citizens to provide welfare grants to other citizens has been called by some "coercive charity." The economist's case for "coercive charity" assumes
A) it is efficient to transfer a dollar from a wealthy person to someone with little income. B) morality cannot be legislated. C) people are basically selfish. D) people who genuinely want the poor to be helped often do not provide any help. E) redistributing income promotes more rapid economic growth.
Suppose that the federal government grants a 50 cent per gallon subsidy to buyers of gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the benefit of the subsidy
a. will go primarily to producers. b. will go primarily to consumers. c. will be split equally between consumers and producers. d. cannot be determined because the actual benefit of a subsidy is not influenced by the elasticities of supply and demand.
Refer to the information provided in Figure 23.4 below to answer the question(s) that follow.
Figure 23.4Refer to Figure 23.4. The aggregate consumption functions C2 and C3
A. imply the same MPS. B. have the same MPC. C. differ in terms of the amount of consumption when income is zero. D. all of the above.