If the marginal propensity to consume (MPC) is 0.75 and there is an increase in planned investment spending of $1 trillion, then saving will
A. increase by $0.5 trillion.
B. increase by $1 trillion.
C. increase by $1.5 trillion.
D. remain unchanged.
Answer: B
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If current aggregate expenditure equals current production, an economy is in equilibrium
a. True b. False Indicate whether the statement is true or false
The content of the basket of goods and services used to compute the CPI changes every month
a. True b. False Indicate whether the statement is true or false
The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:
A. consumers are willing to pay higher prices for domestic goods. B. producers will not exploit reduced foreign competition by charging higher prices. C. foreign companies are more costly to deal with than domestic companies. D. sales of imports come at the expense of domestic goods and jobs.
At which of the following price levels would a shortage occur in Figure 8.4?
A. P1. B. P2. C. P3. D. P4.