Suppose your bank pays you 5 percent interest per year on your savings account. If prices increase by 5 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?
A. $0
B. $1
C. $3
D. $6
Answer: A
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If the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in GDP and income of $60,000, the MPS would be equal to
A) 0.2. B) 0.4. C) 0.8. D) 2.
The marginal propensity to consume is defined as
A) the change in consumption divided by the change in disposable income. B) the change in disposable income divided by the change in consumption. C) consumption divided by disposable income. D) disposable income divided by consumption.
Compared to the long-run absolute elasticity of demand, the short-run absolute elasticity of demand is
A) smaller. B) the same. C) larger. D) either smaller or larger, depending on other factors.
If the marginal product of an input is negative, the total product must also be negative
a. True b. False