In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To
obtain full employment under these conditions, the government should:
A. encourage personal saving by increasing the interest rate on government bonds.
B. decrease government expenditures.
C. reduce tax rates and/or increase government spending.
D. discourage private investment by increasing corporate income taxes.
C. reduce tax rates and/or increase government spending.
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Suppose the economy's production function is Y = AK0.3N0.7. Suppose K = 200, N = 2000, and A = 1. Calculate the marginal product of capital
A) 1.0 B) 1.5 C) 2.0 D) 2.5
Suppose the government of Erbia imposes an income tax of 30 percent. If the base consumption of a consumer is $1,000 and the marginal propensity to consume is 0.8, then the total consumption of the consumer at an income of $5,000 will be _____
a. $2,600 b. $7,900 c. $5,900 d. $3,800
How does money velocity contribute to the observation that in countries with high rates of inflation the inflation rate exceeds the rate of money growth?
What will be an ideal response?
An increase in a country's real interest rate reduces that country's net capital outflow
a. True b. False Indicate whether the statement is true or false