Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:
a. $600 billion.
b. $650 billion.
c. $680 billion.
d. $730 billion.
e. $800 billion.
b
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The above figure shows the market for pizza. The market is in equilibrium when some of the pizza firms go out of business. What point represents the most likely new price and quantity?
A) A B) B C) C D) D E) E
If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold. Based on this information, the demand for his cell-phone covers is
A) elastic or perfectly elastic. B) unit elastic. C) perfectly inelastic. D) elastic or perfectly inelastic.
An optimal corrective tax should be placed on _____
a. the sellers of the externality-generating activity b. the inputs into the externality-generating activity c. the externality-generating activity d. the purchasers of the output of the externality-generating activity
Making many risky bets
A) reduces your expected value. B) is called risk-pooling and can reduce risk. C) is irrational. D) is called risk pooling and increases your expected value.