Assume the marginal propensity to consume (MPC) is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the:
a. left by $1,000 billion.
b. right by $1,000 billion.
c. left by $750 billion.
d. right by $750 billion.
c
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An interior solution to a consumer's utility maximization problem implies _________. (Select all that are true.)
the goods are perfect substitutes consuming more than an optimal amount of at least one good. consuming a positive amount of all goods. spending all income. spending less than full income. the goods are imperfect substitutes consuming a positive amount of one good and zero of the other good.
At the end of 2009, the national debt stood at 60 percent of GDP, substantially higher than its World War II level
a. True b. False
Which of the following would be an external cost in the market for cigarettes?
a. price of a pack of cigarettes b. loss of income for the smoker resulting from extra missed days of work c. higher life insurance premiums paid by the smoker due to smoking d. loss in utility in smoking by the smoker because the smoker must stand outside her office building in the cold winter to smoke e. increased risk of cancer to the nonsmoking passengers in the smoker's car pool
In the short run, tax cuts that are intended to increase aggregate supply have
a. almost no effect on aggregate demand, and a small effect on aggregate supply. b. about an equal effect on both aggregate demand and aggregate supply. c. a much greater effect on aggregate demand than on aggregate supply. d. almost no effect on aggregate supply, and a negative effect on aggregate demand.