Suppose an economy has no income taxes or imports. If the MPC is 0.75, what does the expenditure multiplier equal?
What will be an ideal response?
The expenditure multiplier equals , so in this case it equals = = 4.0.
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A principal feature of a command economy is that
One way to solve the problems caused by information asymmetry is:
A. proofing. B. surfing. C. signaling. D. All of these are solutions to information asymmetry.
The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. 
In the graph above, the average variable cost curve is labeled ________, the average total cost curve is labeled ________, and the marginal cost curve is labeled ________.
A. C; B; A B. C; A; B C. B; C; A D. A; B; C
For this question, assume that equilibrium output is determined in the ZZ-Y diagram. Further assume that policy makers' goals are (1 ) to achieve balanced trade (i.e., NX = 0); and (2 ) to achieve a target level of output, say YT. Now, suppose that the initial level of equilibrium output is equal to YT (i.e., Y = YT) and that a trade deficit exists at this initial level of output. Which of the
following policy actions would most likely enable the policy makers to achieve their two goals simultaneously? A) a reduction in government spending B) convince the country's trading partners to pursue policies that will cause an increase in foreign income (Y) C) a reduction in the real exchange rate D) a reduction in taxes E) a simultaneous increase in government spending and reduction in the real exchange rate F) none of the above