If the MPC is 3/5 then the multiplier is
a. 4, so a $100 increase in government spending increases aggregate demand by $400.
b. 1.5, so a $100 increase in government spending increases output by $150.
c. 2.5, so a $100 increase in government spending increases aggregate demand by $250.
d. 1.67, so a $100 increase in government spending increases output by $166.67.
c
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In the economic way of thinking, profit and loss can be eliminated only by
A) appropriate and effective price controls. B) careful and detailed government regulation of business. C) a total elimination of uncertainty. D) taxation. E) the confiscation of private property.
Debt service
A) is rarely an issue for high-income countries. B) always makes a country worse off for having borrowed. C) is a problem when the amount of debt is small relative to the size of the economy. D) tends to benefit low- and middle-income countries at the expense of high-income countries.
Which of the following statements is false?
A) A change in the price of good X will usually change the quantity supplied of good X, ceteris paribus. B) A change in the number of sellers of a good can change the supply of that good. C) Price and quantity supplied are directly related. D) A vertical supply curve represents a direct relationship between price and quantity supplied.
Country D and Country E both recorded an increase in real GDP of 4 percent per year from 1997 to 2007. During this time, the population for Country D grew at 3 percent per year and the population for Country E grew at 2 percent. Which of the following is true during this period?
A. Per capita GDP decreased for both Country D and Country E. B. Per capita GDP increased for both Country D and Country E. C. Per capita GDP increased for Country D only. D. Per capita GDP decreased for Country E only.