Suppose the consumption equation is represented by the following: C = 250 + .75YD. Now assume government spending increases by 100 for the above economy. Given the above information, we know that equilibrium output will increase by
A) 200.
B) 400.
C) 800.
D) 1000.
E) none of the above
B
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A $100 billion increase in government purchases would:
a. increase AD by $500 billion if MPC = 0.8. b. decrease AD by $300 billion if MPC = 2/3. c. decrease AD by $200 billion if MPC = 0.9. d. decrease AD by $40 billion if MPC = 0.4.
A decrease in the demand for a product will cause output of that product to
a. increase and the demand for and prices of the resources used to produce the product to rise. b. decrease and both the demand for and prices of the resources used to produce the product to fall. c. decline; the demand for the resources used to produce the product will remain constant. d. increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic.
With a flat tax,
A. Decisions are based on economic considerations rather than tax incentives. B. Everyone pays the same amount of absolute tax. C. The government's ability to change the mix of output is increased. D. Vertical inequities cannot occur.
In which of the following market structures with 2 identical firms do both firms produce more than the Cournot outcome?
A) Stackelberg Oligopoly B) Cartel C) Perfect Competition D) None of the above.