Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending?
a. $15 million
b. $85 million
c. $100 million
d. $118 million
e. $185 million
b
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel
A) $90 B) $110 C) $100 D) None of the above is correct.
Which of the following would NOT shift the aggregate demand curve to the left?
A) an increase in money demand B) a cut in federal government spending C) a reduction in federal income taxes D) a decrease in consumption spending
Which of the following is a characteristic of the oligopoly model?
a. The oligopoly market consists of only a small number of sellers. b. The sellers in an oligopoly market are price takers. c. The output decisions taken by sellers are uniform and steady. d. There are barriers to the exit of firms in an oligopoly market.