Briefly discuss the relationship between leakages and the size of the multiplier
What will be an ideal response?
The fewer leakages out of the circular flow will increase the size of the multiplier. Thus, if the marginal propensities to consume and invest increase or the marginal propensity to import decreases, the slope of the IS curve will decrease and the IS curve will be flatter.
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If average labor productivity increases, then the same number of employed workers will always produce:
A. more output per person. B. less output per person. C. less total output. D. more total output.
Figure 13-2 above illustrates an economy with an unstable commodity demand and two possible Fed policies, a constant real money supply or a constant interest. Which policy target promotes a stable economy best?
A) constant money supply, A0 to A1 B) constant money supply, B0 to B1 C) constant interest rate, A0 to A1 D) constant interest rate, B0 to B1
When the social costs of producing or consuming a good exceed the private costs, _____
a. a positive externality exists b. an inefficiently high quantity of the good will be produced and consumed, from the society's point of view c. the direct consumers of the good will bear the external costs d. the individuals involved in the production of the good do not bear the private costs e. the quantity of the good produced will be less than the socially efficient level
Which of the following is true regarding private ownership?
a. Relative to common ownership, private ownership generally leads to less conservation of resources. b. With private ownership, owners are held accountable for using their resources in a manner that harms the resources of others. c. Private ownership generally gives the owner little incentive to find ways to use the resource wisely. d. With private ownership, resource owners have little incentive to consider the preferences of others when deciding how to employ a resource.