If consumption and investment spending decline, then state and local government spending is likely to
A. Decline, leading to less economic instability.
B. Increase, leading to less economic instability.
C. Increase, leading to more economic instability.
D. Decline, leading to more economic instability.
Answer: D
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Explain why economics is a science and how it differs from a physical science.
What will be an ideal response?
The hands-off view of the classical school rests on which of the following two simple propositions about markets?
a. Demand creates its own supply and markets are basically competitive. b. Industrial policy is inevitable and all prices are flexible. c. Market failure occurs and prices are rigid. d. Wages are sticky downward and market failure is inevitable. e. Markets are basically competitive and prices are flexible.
If the MPC is .5, the multiplier is
A. .5. B. 1. C. 2. D. 4.
The figure below shows the marginal external benefit curve (MEB) from the domestic production of mopeds. A tariff has caused domestic production to increase from 500,000 to 600,000.
The increase in external benefits to the nation of the increased production of mopeds because of the tariff is
A. $5 million. B. $2.5 million. C. $13.25 million. D. $7.5 million.