Refer to Figure 11.1. Assume aggregate demand is represented by AD1, full-employment output is $6.0 trillion, and the MPC is 0.75. The spending fiscal stimulus needed to reach full-employment equilibrium is
A. $0.4 trillion
B. $2 trillion.
C. $1 trillion.
D. $0.1 trillion.
Answer: D
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The SSS Co has a patent on a particular medication. The medication sells for $1 per daily dose and marginal cost is estimated to be a constant at $0.20
Assuming linear demand and marginal cost curves, use this information to estimate the deadweight loss from monopoly pricing if the firm currently sells 1,000 doses per day. Can this loss be justified?
International comparisons of per capita GDP may not reflect the standard of living because __________. a. currency exchange rates may not fully account for differences in purchasing power, and thus people in a country with high per capita GDP may have a lower standard of living because of high local prices for food, housing, or other necessities. b. people in some countries enjoy poverty and do
not mind a lack of access to medicine, education, nutritious food, and safe drinking water. c. markets do not exist in less-developed countries. d. None of the answers above are correct.
Figure 21-1
In Figure 21-1, if the existing antipoverty program were replaced by a negative income tax, most economists believe that it would result in a move like which of the following?
A. C to F B. A to B C. D to E D. G to D
If gold and the dollar are substitutes, a cut in the Japanese discount rate can be expected to
A. appreciate the dollar and decrease the price of gold. B. depreciate the dollar and increase the price of gold. C. depreciate the dollar and decrease the price of gold. D. appreciate the dollar and increase the price of gold.