In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, transfers must be:
A. increased by $1.33 billion.
B. increased by $1 billion.
C. decreased by $1.33 billion.
D. decreased by $1 billion.
Answer: C
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An excess benefit from corrective taxation arises because the tax revenues can be spent on compensation
a. True b. False
Answer the following statements true (T) or false (F)
1) If no consumer surplus exists in a market, it is possible for a firm to earn greater profits. 2) In first-degree price discrimination, the firm's marginal revenue curve is equal to its demand curve. 3) In third-degree price discrimination, the price markup is smaller in the markets that are less responsive to price changes. 4) In third-degree price discrimination, consumer groups with the largest price elasticity of demand will pay the lowest price compared to the consumer groups with smaller price elasticities. 5) If the own price elasticity of demand for a firm's product is the same across all consumers, it is not possible for the firm to practice third-degree price discrimination.
The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad. B. stabilizing the exchange rate against external shocks. C. stabilizing the interest rate against foreign capital outflows. D. promoting long term economic growth.
Which of the following is most nearly consistent with Say's law?
A) When a person produces one good, he or she plans to demand other goods. B) When a person produces a good, he or she plans to sell it. C) When a person buys a good, he or she plans to pay for it with money. D) When a person goes to work, he or she plans to produce.