Refer to the table. If the equilibrium level of real GDP is $43 billion, its level of consumption will be:
Answer the question on the basis of the following table for a particular country in which C is
consumption expenditures, I g is gross investment expenditures, G is government expenditures,
X is exports, and M is imports. All figures are in billions of dollars. Each question is
independent of other question using the same table, unless otherwise stated.
A. $20 billion.
B. $22 billion.
C. $24 billion.
D. $26 billion.
D. $26 billion.
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In the basic Keynesian model, an increase in transfer payments:
A. increases short-run equilibrium output. B. increases potential output. C. reduces short-run equilibrium output. D. reduces potential output.
Briefly explain why changes in government spending or taxes do not have independent effects on aggregate demand. What does shift the aggregate demand curve in the classical model?
What will be an ideal response?
What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?
a. Price would fall, and the effect on quantity would be ambiguous. b. Price would rise, and the effect on quantity would be ambiguous. c. Quantity would fall, and the effect on price would be ambiguous. d. Quantity would rise, and the effect on price would be ambiguous.
A society can produce two goods: green tea and vitamin water. As this society moves down its production possibility frontier, producing more and more units of vitamin water, the opportunity cost of producing vitamin water increases. The society's production possibilities frontier will be
A. positively sloped and bowed outward. B. negatively sloped and bowed inward. C. positively sloped and bowed inward. D. negatively sloped and bowed outward.