In a simple, private economy, suppose that the MPC is .8 and investment rises by $20 million. At the new equilibrium, how much will saving have increased?
a. $8 million
b. $16 million
c. $20 million
d. $80 million
e. $100 million
c
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Indicate whether the statement is true or false
One way the venture capital firm avoids the free-rider problem is by
A) prohibiting the sale of equity in the firm to anyone except the venture capital firm. B) prohibiting members from serving on the board of directors. C) prohibiting the borrowing firm from replacing management. D) requiring collateral equal to the value of the borrowed funds.
The problem of dead capital can be eliminated by
A) changing the structure of import tariffs. B) increasing the labor force participation rate. C) making it easier for people to establish legal ownership of productive capital. D) restricting population growth.