An increase in spending of $25 billion increases real GDP from $600 billion to $700 billion. The marginal propensity to consume must be:
A. 0.25 and the multiplier is 4
B. 0.50 and the multiplier is 2
C. 0.75 and the multiplier is 4
D. 0.80 and the multiplier is 5
C. 0.75 and the multiplier is 4
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At macroeconomic equilibrium,
a. total investment equals total inventories. b. total spending equals total production. c. total consumption equals total production. d. total taxes equal total transfers.
As new firms enter a monopolistically competitive market, product differentiation becomes less pronounced
Indicate whether the statement is true or false
Jack, an outstanding high school baseball player, has to decide whether to sign a contract with a major league baseball organization or to go to college. If Jack is determining his opportunity costs to go to college instead, he would include
A. just the tuition and fees he would pay. B. the tuition and fees he would pay and the costs of books he must purchase. C. the tuition and fees he would pay, the costs of the books he must purchase plus the costs of room and board. D. the tuition and fees he would pay, the costs of books he must purchase, the extra costs of room and board to live on campus minus the income he would receive from playing professional baseball. E. the tuition and fees he would pay, the costs of books he must purchase, the extra costs of room and board to live on campus plus the income he would receive from playing professional baseball.
Emission controls on automobiles are an example of a
a. corrective tax. b. command-and-control policy to increase social efficiency. c. policy that reduces pollution by allocating resources through market mechanisms. d. policy to reduce congestion on urban freeways.