The leader of Atlantis hires you as an economic consultant. He is concerned that the output level in Atlantis is too low and that this will cause prices to fall. He feels that it is necessary to increase output by $200 billion. He tells you that the MPC in Atlantis is 0.8. Which of the following would be the best advice to give to the Atlantis president?
A. increase government spending by $200 billion
B. reduce government spending by $100 billion
C. increase government spending by $100 billion
D. decease taxes by $50 billion
Answer: D
You might also like to view...
An optimizing consumer has to choose between two goods–Good A priced at PA and Good B priced at PB
Given that MBA is the marginal benefit from consuming Good A and MBB is the marginal benefit from consuming Good B, the consumer's well-being will be maximized at the point where: A) MBA = MBB. B) MBA/PB=MBB/PA. C) MBA/PA = MBB/PB. D) MBA = MBB/PB.
How mobile is Europe's labor force?
What will be an ideal response?
If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about
a. 1.33, and supply is elastic. b. 1.33, and supply is inelastic. c. 0.75, and supply is elastic. d. 0.75, and supply is inelastic.
Which of the following is included in both the balance of trade and the balance of payments?
A) exports B) earnings on domestic assets owned by foreign residents C) international capital movements D) earnings by domestic residents on assets located abroad