Kara earns $1,500 a month and from that pays an overall tax rate of 15 percent. On average she saves $255 per month. What is her marginal propensity to consume and her marginal propensity to save?
What will be an ideal response?
MPC = 0.8 (or 80 percent) and MPS = 0.2 (or 20 percent).
Kara’s disposable income (after taxes) is $1,275. $255 is 20 percent of $1,275, and the remaining $1,020 is 80 percent of $1,275.
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Luxury brands like designer sunglasses are goods that may exhibit snob effects. Suppose this is true, and the price for a particular brand increases. What happens to the component changes in the quantity demanded?
A) Pure price effect and snob effect are negative B) Pure price effect and snob effect are positive C) Pure price effect is positive, snob effect is negative D) Pure price effect is negative, snob effect is positive
Which of the following correctly ranks the three countries, from highest to lowest, for percentage of college-age children in school?
a. United Kingdom, Mali, Mexico. b. Mexico, Mali, United Kingdom. c. United Kingdom, Mexico, Mali. d. Mali, Mexico, United Kingdom.
While a television news reporter might state that "Today the Fed raised the federal funds rate from 1 percent to 1.25 percent," a more precise account of the Fed's action would be as follows:
a. "Today the Fed told its bond traders to conduct open-market operations in such a way that the equilibrium federal funds rate would increase to 1.25 percent.". b. "Today the Fed raised the discount rate by a quarter of a percentage point, and this action will force the federal funds rate to rise by the same amount.". c. "Today the Fed took steps to increase the money supply by an amount that is sufficient to increase the federal funds rate to 1.25 percent.". d. "Today the Fed took a step toward expanding aggregate demand, and this was done by raising the federal funds rate to 1.25 percent.".
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.