As the marginal propensity to consume (MPC) decreases, the spending multiplier:
A. increases.
B. decreases.
C. remains constant.
D. becomes undefinable.
Answer: B
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Unemployment that results from technological changes that renders some people's skills obsolete is called: a. frictional unemployment. b. cyclical unemployment
c. structural unemployment. d. seasonal unemployment.
Some countries have negative nominal interest rates. Which of the following statements about this situation is not true?
A) A saver or lender will get back less than the amount she invested. B) This is mostly a result of deliberate central bank policies. C) Consumers are expected to save more and consume less. D) Consumers are expected to borrow more and spend more.
Refer the above figure. Stage "2" of the economy is called
A. a contraction. B. an expansion. C. a peak. D. a trough.
Insurance companies perform all of the following functions performed by financial intermediaries except:
A. pooling the resources of small savers. B. transferring risk. C. supplying liquidity. D. making large investments.