Suppose marginal propensity to consume (MPC) is 0.7 and there is a $100 increase in autonomous consumption. Given this information, real GDP will increase by
A. $143.
B. $333.
C. $1,000.
D. $700.
Answer: B
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The tax cuts in 1981 and 1982 did not lead to growth in GDP as did the tax cuts in 1964. One reason for this difference was that
A) the 1981-82 tax cuts concentrated on personal tax cuts, but the 1964 cuts were for both personal and corporate taxpayers. B) the saving rate increased in 1981-82, but it decreased in 1964. C) expansionary monetary policy accompanied the 1964 tax cuts, but the 1981-82 cuts were accompanied by restrictive monetary policy. D) tax indexation was built into the 1981-82 tax-cut program, but in 1964 there was no indexation.
Suppose a manager is deciding whether or not to purchase a piece of equipment to make an input internally and has completed the majority of the net present value (NPV) calculations. The manager has correctly calculated the NPV to be equal to: NPV = ($1.082 × Q) - $200,000, where Q is the annual quantity of the input the firm needs. If the firm needs 175,000 units of the input each year, the
manager ________ buy the equipment because the NPV is ________. A) should; positive B) should not; negative C) should; negative D) should not; positive
A checkable and debitable banking account is
A) a liability to a commercial bank. B) an asset to a commercial bank. C) a liability to the household or firm that has the account. D) an asset for the Federal Reserve System.
The balance of trade includes
a. all debit and credit items. b. all merchandise, services, and capital transactions. c. only merchandise exports and imports. d. only service transactions.