If the marginal propensity to consume is 0.9, the government purchases by $100, and net exports decline by $60, the equilibrium level of real gross domestic product will
A) decrease by up to $400
B) increase by up to $400
C) increase by up to $600
D) decrease by up to $1,000
E) increase by up to $1,600
Ans: B) increase by up to $400
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Which of the following tools cannot be used by the government to maintain a fixed exchange rate?
A. rationing of foreign exchange B. currency market intervention C. controlling the flow of trade through various barriers D. keeping its level of international reserves strictly fixed
Refer to Figure 1A.1. Assume that the graph in this figure represents the demand and supply curves for used cars, which are inferior goods. An increase in income would be represented by a shift from
A) Demand 1 to Demand 2. B) Demand 2 to Demand 1. C) Supply 1 to Supply 2. D) Supply 2 to Supply 1.
Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result,
A) aggregate demand will increase by 2.5%. B) the purchasing power of wages will rise if wages increase by 2.5%. C) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. D) the short-run aggregate supply curve will shift to the left as wages increase.
In economics, technology only refers to the development of new products
Indicate whether the statement is true or false