Answer the following statements true (T) or false (F)
1) If households and firms in an economy would save all extra income that they receive so that MPC = 0, then the multiplier in that economy is zero.
2) The steeper is the consumption schedule in an economy, the larger will be the multiplier.
3) Positive net exports increase aggregate expenditures beyond what they would be in a closed economy and thus have an expansionary effect on domestic GDP.
4) An increase in imports, other things constant, would tend to raise the equilibrium level of GDP.
1) F
2) T
3) T
4) F
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Many developing countries were once under colonial rule, a system of government that:?
Refer to the scenario above. Suppose Edwin consumes the total output produced. What is likely to happen in this case?
A) GDP will remain unchanged. B) GDP will decrease. C) Trade surplus will increase by $200. D) GDP will increase.
Which of the following statements is correct?
A) An increase in the money wage rate shifts the aggregate demand curve leftward. B) An increase in the price level shifts the aggregate demand curve leftward. C) An increase in the price level shifts the aggregate demand curve rightward. D) An increase in the quantity of the money shifts the aggregate demand curve rightward. E) An increase in the real interest rate shifts the aggregate demand curve rightward.
Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?
A) $8 B) $11.50 C) $21 D) There is no difference.