If the marginal propensity to consume in an economy is 0.5, then a $1,000 increase in government spending will increase aggregate demand by $4,000
a. True
b. False
Indicate whether the statement is true or false
False
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A manufacturing firm is deciding whether to invest in a new printer that needs an initial investment of $150,000. This will increase cash flows in the first year by $80,000 and $75,000 in the second year. If the interest rate is 10% then the net present value of these cash flows is
a) $5,000 b) - $9,091 c) -$15,290 d) -$21,901
The emigration of some of Whoville’s workers reduces the quantity of thingamabobs supplied at every price by 50. The new supply curve will ____ the old supply curve.
A. be steeper and less elastic at every price than B. have the same slope and the same elasticity at every price as C. have the same slope and be more elastic at every price than D. More information is needed to predict the relationship between the elasticities of the two supply curves.
Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 36 units of food per year or 18 units of clothing. Which of the following is true? a. Iceland has both a comparative and absolute advantage in producing food
b. Iceland has a comparative advantage, but not an absolute advantage in producing food. c. Lavaland has both a comparative and absolute advantage in producing clothing. d. Lavaland has an absolute advantage, but not a comparative advantage in producing clothing.
The existence of discouraged workers: a. increases the size of the labor force, but does not affect the unemployment rate
b. affects neither the size of the labor force nor the unemployment rate. c. may cause the official unemployment rate to understate the true amount of unemployment. d. may cause the official unemployment rate to overstate the true amount of unemployment.