Higher interest rates will, all else equal:
A. increase the extraction cost of a resource.
B. increase the user cost of extracting a resource.
C. reduce the user cost of extracting a resource.
D. have no impact on either the user cost or extraction cost of a resource.
Answer: C
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If the economy has an MPC of 0.8, by how much will a $50 billion increase in government purchases increase GDP? By how much will a $50 billion increase in taxes decrease GDP?
What will be an ideal response?
When there is a shift in autonomous expenditure, why is there a multiple expansion of income and real GDP? Trace the multiplier effect through the first four rounds when there is an increase in autonomous expenditure of $40 billion and the marginal propensity to consume is 0.75
As the unemployment rate rises,
a. real GDP also rises. b. nominal GDP rises. c. the employment rate rises. d. lost national output rises.
Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the
a. free rider problem. b. law of comparative advantage. c. infant-industry argument. d. law of diminishing marginal returns.