The change in consumption divided by a change in income is called the:
a. consumption function.
b. marginal propensity to consume.
c. marginal propensity to spend.
d. spending function.
e. changing propensity to consume.
b
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A patent protects an inventor's creation from being copied or stolen for a period of
A) 10 years. B) 20 years. C) 30 years. D) 50 years.
What price should a firm charge for a package of two shirts given a marginal cost of $4 and an inverse demand function P = 8 ? 2Q by the representative consumer?
A. $8 B. $4 C. $16 D. $12
The most important source of financial capital for firms today is
A) sale of bonds. B) sale of new issues of stock. C) trade of previously issued stock. D) reinvestment of profits.
You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The Chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?
A. Increase government purchases by $60 billion. B. Increase government purchases by $150 billion. C. Cut taxes by $60 billion and to increase government purchases by $60 billion. D. Cut taxes by $60 billion.